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DAF/COMP/AR(2011)17

Organisation de Coopération et de Développement Économiques

Organisation for Economic Co-operation and Development

24-Jun-2011

___________________________________________________________________________________________

English - Or. English

Directorate for Financial and Enterprise Affairs

COMPETITION COMMITTEE

DAF/COMP/AR(2011)17

Unclassified

ANNUAL REPORT ON COMPETITION POLICY DEVELOPMENTS IN THE UNITED STATES

-- 2010 --

This report is submitted by the United States to the Competition Committee FOR DISCUSSION at its forthcoming

meeting to be held on 29-30 June 2011.

English - Or. English

JT03304510

Document complet disponible sur OLIS dans son format d'origine

Complete document available on OLIS in its original format

DAF/COMP/AR(2011)17

TABLE OF CONTENTS

Introduction ................................................................................................................................................. 3

Senior DOJ and FTC Staff Appointments ........................................................................................ 3

Changes in Law or Policies .................................................................................................................. 3

2.1

2.2

Enforcement of antitrust law and policies: actions against anticompetitive practices ......................... 4

3.1

3.2

3.3

3.4

3.5

3.6

Staffing and Enforcement Statistics ............................................................................................ 4

Antitrust Cases in the Courts ...................................................................................................... 5

Statistics on Private and Government Cases Filed...................................................................... 7

Significant DOJ and FTC Enforcement Actions......................................................................... 7

Advisory Letters from the FTC................................................................................................. 13

Business Reviews Conducted by the Department of Justice .................................................... 14

Enforcement of antitrust laws and policies: mergers and concentrations .......................................... 14

4.1

4.2.

Changes in Antitrust Rules, Policies, or Guidelines ................................................................... 3

Proposals to Change Antitrust Laws, Related Legislation or Policies ........................................ 4

Enforcement of Pre-merger Notification Rules ........................................................................ 14

Significant Merger Cases .......................................................................................................... 15

International antitrust cooperation and outreach ................................................................................ 21

5.1

5.2

International Antitrust Cooperation Developments .................................................................. 21

Outreach .................................................................................................................................... 23

Regulatory and Trade Policy Matters ............................................................................................. 23

6.1

Regulatory Policies ................................................................................................................... 23

New Studies Related to Antitrust Policy ........................................................................................ 28

7.1

7.2

7.3

Joint Conferences and Reports.................................................................................................. 28

FTC Conferences, Reports, and Economic Working Papers .................................................... 28

DOJ Conferences, Reports, and Economic Working Papers .................................................... 29

APPENDICES .............................................................................................................................................. 31

DAF/COMP/AR(2011)17

Introduction

This report describes federal antitrust developments in the United States for the period October 1,

2009, through September 30, 2010 (“FY 2010”). It summarizes the competition enforcement and policy

activities of both the Antitrust Division (“Division”) of the U.S. Department of Justice (“Department” or

“DOJ”) and the Federal Trade Commission (“Commission” or “FTC”). The two agencies are collectively

referred to throughout this report as the “Antitrust Agencies” or “Agencies.” For additional information on

the agencies’ activities during FY 2010 see the FTC in 2010 Report, available at

http://www.ftc.gov/os/2010/04/2010ChairmansReport_screen.pdf and the DOJ 2010 Newsletter, available

at http://www.justice.gov/atr/public/update/division-update-2010.html.

Senior DOJ and FTC Staff Appointments

In January 2010, Rachel Brandenburger was appointed as Assistant Attorney General (AAG)

Christine Varney’s special advisor for international matters. William F. Cavanaugh, Jr. resigned as Deputy

Assistant Attorney General (“DAAG”) for Civil Matters in July 2010, and Molly S. Boast resigned her

position as DAAG in February 2011. Joseph F. Wayland became DAAG for Civil Enforcement in

September 2010, and Katherine B. Forrest became DAAG for Criminal and Civil Operations in October

2010. Sharis A. Pozen became DAAG for Civil Enforcement in January 2011.

In November 2009, President Obama announced the nomination of Edith Ramirez and Julie Brill

as FTC Commissioners. Their nominations were confirmed by the U.S. Senate on March 3, 2010, and

Commissioner Ramirez and Commissioner Brill were sworn in by FTC Chairman Jon Leibowitz on April

5 and April 6, 2010, respectively. Pamela Jones Harbour resigned as Commissioner effective April 6,

2010, after six-and-a-half years on the Commission. On November 30 2009, FTC Chairman Jon Leibowitz

announced the appointments of Cecelia Prewett as Director of the FTC Office of Public Affairs and Norm

Armstrong, Jr. as Deputy Director of the FTC Bureau of Competition.

Changes in Law or Policies

2.1

Changes in Antitrust Rules, Policies, or Guidelines

On August 19, 2010, the Agencies issued revised horizontal merger guidelines, which mark the

first major revision of the U.S. guidelines in 18 years. The revised guidelines aim to provide a better

understanding of how the agencies evaluate proposed mergers to identify and challenge competitively

harmful mergers while avoiding unnecessary interference with mergers that have no or beneficial

competitive impact. Key developments include: clarification that merger analysis does not rely on a single

methodology; introduction of a new section on “Evidence of Adverse Competition Effects;” discussion of

the appropriate use of market definition and market concentration tools; updated explanation of the

hypothetical monopolist test; revised concentration thresholds; expanded discussion of unilateral

competitive effects and an expanded section on coordinated effects; an updated discussion of entry

analysis; and, new sections on powerful buyers, mergers between competing buyers, and partial

acquisitions. In drafting the revisions, the agencies considered a wide range of opinions from the U.S. and

internationally that were gathered through a series of joint public workshops and discussion, and hundreds

of public comments submitted by attorneys, academics, economists, consumer groups and businesses.

The 2010 guidelines are available at http://www.ftc.gov/os/2010/08/100819hmg.pdf and

http://www.justice.gov/atr/public/guidelines/hmg-2010.html.

On August 13, 2010, the FTC proposed changes to improve the premerger notification form that

companies must file when seeking the agencies’ review of a proposed transaction under the Hart-ScottRodino Act. The proposal aims to eliminate requests for unnecessary information, but also requires

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additional information that is needed to help the agencies during their initial review of transactions. The

Commission believes the proposed changes will make the premerger notification process more efficient,

and the form easier to complete. The FTC solicited public comments on the proposed, and expects to

release the revised form during 2011. See http://www.ftc.gov/os/2010/08/100812hsrfrn.pdf.

2.2

Proposals to Change Antitrust Laws, Related Legislation or Policies

On July 27, 2010, the Commission testified before Congress, calling for legislation that will end

pay-for-delay settlements, i.e. settlements between brand-name pharmaceutical companies and generic

competitors that delay the entry of lower-priced generic drugs into the market. See

http://www.ftc.gov/opa/2010/07/antitrust.shtm. FTC Chairman Leibowitz has made additional public

statements urging courts and Congress to rethink their approach to pay-for-delay settlements, which cost

American consumers $3.5 billion a year in higher prescription drug prices, and identifying the stopping of

pay-for-delay settlements a top competition priority. See http://www.ftc.gov/opa/2010/04/cipro.shtm and

http://www.ftc.gov/opa/2010/01/payfordelay.shtm.

Enforcement of antitrust law and policies: actions against anticompetitive practices

3.1

Staffing and Enforcement Statistics

3.1.1

FTC

During FY 2010, the FTC had 512 FTE (full-time equivalents, a U.S. measure of work years)

staff working on competition enforcement, including 302 attorneys (212 of whom work for the FTC

Bureau of Competition), 60 economists (51 of whom are Phd economists), and 109 “other” professionals.

The “other” category includes investigators, merger analysts, compliance specialists, industry analysts,

research analysts, financial analysts/accountants, paralegals, and support staff.1 The FTC’s Maintaining

Competition Mission expended approximately $119 million in FY 2010.

During FY 2010, 1,166 proposed mergers and acquisitions were reported for review under the

Hart-Scott-Rodino Antitrust Improvements Act (“HSR”), a 63% increase from the number of HSR

transactions reported during FY 2009. The agencies were authorized to request additional information

with respect to 1,128 of these reported transactions (which accounts for, inter alia, incomplete, nonreportable and secondary transactions). Commission staff opened 186 initial phase investigations and

issued requests for additional information (“second requests”) in 20 transactions. During the year, the

Commission challenged 22 transactions leading to 19 consent orders. 18 of these consent orders were

obtained in non-adjudicative proceedings, and one was obtained after the Commission filed an

administrative complaint challenging the merger. In addition, three transactions were abandoned after the

Commission informed the parties of its antitrust concerns.

During FY 2010, the Commission brought 7 non-merger enforcement actions challenging a

variety of anticompetitive conduct, 5 of which were resolved by consent agreement. Practices challenged

included alleged refusals to deal, price fixing, market allocation agreements, and a trade association’s

anticompetitive sharing of sensitive information.

Since the full-time equivalent measure does not reflect actual employees, but rather a measure of employee

work years, the 512 FTEs cannot be fully split out into actual positions, thus the numbers provided are

approximations.

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10.

The Commission filed amicus curiae briefs in five cases, including one submitted jointly with the

United States and two before the Federal Circuit. The FTC provided 4 advisory letters and submitted 11

advocacy filings.

3.1.2

DOJ

11.

At the end of FY 2010, the Division employed 787 persons: 354 attorneys, 55 economists, 170

paralegals, and 208 other professional staff. For FY 2010, the Division received an appropriation of $163.2

million.

12.

During FY 2010, the Division opened 158 investigations and filed 74 civil and criminal cases in

federal district court. In FY 2009, the Division was party to three antitrust cases decided by the federal

courts of appeals.

13.

During FY 2010, the Division filed 60 criminal cases in which it charged 21 corporations and 63

individuals. Eleven corporate defendants and 19 individuals were assessed fines totalling $343 million and

29 individuals were sentenced to a total of 26,046 days of incarceration. Another six individuals were

sentenced to spend a total of 1,295 days in some form of alternative confinement.

14.

The Division investigated 64 mergers and challenged 10 of them in court; eight transactions were

restructured or abandoned prior to the filing of a complaint as a result of the Division’s announcement that

it would otherwise challenge the transaction. In addition, the Division screened a total of 379 bank

mergers. The Division opened 102 civil investigations (merger and non-merger), and issued 480 civil

investigative demands (a form of compulsory process). The Division filed four non-merger civil

complaints. Also during FY 2010, the Division issued three business review letters.

3.2

Antitrust Cases in the Courts

3.2.1

United States Supreme Court

15.

In American Needle, Inc. v. NFL, 130 S. Ct. 2201 (May 24, 2010), the Supreme Court addressed

the issue of whether a sports league structured as a joint venture of separately owned teams should be

considered a single economic entity for purposes of the Sherman Act Section 1 concerted action

requirement. On May 24, 2010, the Court held that the NFL teams compete in the market for intellectual

property and hence collective licensing decisions by the NFL teams deprive the marketplace of

independent centers of decision-making. The Court held that joint venture’s actions were not those of a

single economic entity because it acted as an instrumentality of the teams. See a more complete discussion

in the 2009 Annual Report on Competition Policy Developments in the U.S, at

http://www.ftc.gov/bc/international/docs/usannualreport09.pdf.

3.2.2

U.S. Court of Appeals Cases

16.

In FY 2010, the United States filed amicus briefs in a “reverse payment” pharmaceutical case. In

re Ciprofloxicin Hydrochloride Antitrust Litigation, 604 F.3d 98 (2d Cir. 2010). As background, to market

a new drug, a pharmaceutical company requires the permission of the Food and Drug Administration

(“FDA”), which it seeks to obtain by filing a New Drug Application (“NDA”) containing data regarding

the drug’s safety and efficacy. These data are time consuming and expensive to acquire. In the HatchWaxman Act, enacted in 1984, Congress chose to permit firms wishing to market a drug that is

bioequivalent to an already approved New Drug (that is, a “generic” version of the branded New Drug) to

submit an Abbreviated New Drug Application (“ANDA”), in essence taking advantage of the safety and

efficacy data previously submitted with the NDA. If the new drug is indisputably protected by one or more

patents, approval to market the generic is withheld until patent protection expires. The generic firm may,

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however, inform the FDA (by what is called a “Paragraph IV certification”) and the firm with the approved

NDA that it believes either that the relevant patent is invalid, or that the generic does not infringe the

relevant patent. In instances involving Paragraph IV certifications, approval to market is withheld for two

and a half years (or until the patent litigation is resolved against the branded firm) and the branded firm is

permitted to sue the generic firm for patent infringement even before the generic attempts to market its

drug. To encourage generic firms to challenge drug patents, Congress provided for the first firm to file an

ANDA and Paragraph IV certification with respect to a particular branded drug to be the exclusive generic

marketer for a 180-day “exclusivity period” once it begins marketing.

17.

In many instances, the branded and generic firms have chosen to settle their patent litigation

instead of carrying it through to judgment. In a number of these instances, the settlement has provided

that the generic firm will not market its generic product for some time but then is permitted to market it, in

some cases before patent expiration. It has also provided for significant money to be paid by the branded

firm to the generic firm (“reverse payment”), perhaps more than the generic firm could have earned by

winning the patent litigation and then marketing the drug at the lower prices resulting from competition.

Following such settlements, antitrust suits have often been filed alleging that the settlement agreement is a

restraint of trade, an agreement not to compete, illegal under the Sherman Act. In re Ciprofloxicin

Hydrochloride Antitrust Litigation (“Cipro”) is one such antitrust case.

18.

The district court in Cipro granted summary judgment for the defendant drug companies,

reasoning that the challenged settlement agreement did not restrict competition beyond the scope of the

claims in the relevant patent, and the patent is a grant of exclusivity within those claims. The court

recognized, however, that the analysis would be different if the patent had been procured by fraud on the

patent office or the patent owner knew that its infringement suit was objectively baseless and therefore a

sham. 366 F. Supp. 2d 514 (E.D.N.Y. 2005). In subsequent litigation involving a different drug, the

United States Court of Appeals for the Second Circuit substantially adopted the Cipro district court’s

analytic framework: “absent an extension of the monopoly beyond the patent's scope . . . and absent fraud, .

. . the question is whether the underlying infringement lawsuit was ‘objectively baseless in the sense that

no reasonable litigant could realistically expect success on the merits.’” In re Tamoxifen Citrate Antitrust

Litigation, 466 F.3d 187, 213 (2d Cir. 2006)

19.

Different groups of plaintiffs in Cipro had their appeals directed to two different courts of appeal.

In one appeal, the United States Court of Appeals for the Federal Circuit adopted an analytic framework

substantially similar to that adopted in the Tamoxifen case. In re Ciprofloxicin Hydrochloride Antitrust

Litigation, 514 F.3d 1323 (Fed. Cir. 2008), cert. denied, 129 S.Ct. 2828 (2009). The other went to the

United States Court of Appeals for the Second Circuit. After oral argument, the panel of three judges

invited the United States to file an amicus brief. In that brief, the United States explained why it

considered the Tamoxifen framework to be incorrect and argued that “reverse payment” agreements that

delay entry by a potential generic competitor in exchange for a payment from a branded drug manufacturer

with market power presumptively violate the Sherman Act, but that defendants are entitled to rebut that

presumption by offering evidence that the reverse payment did not purchase reduced competition. The

panel, however, concluded that it was bound by the earlier Tamoxifen decision of the same court, affirmed

the district court, and invited the losing plaintiffs to ask the full court to rehear the case, the full court

having the authority to depart from the Tamoxifen decision. In re Ciprofloxicin Hydrochloride Antitrust

Litigation, 604 F.3d 98 (2d Cir. 2010). Plaintiffs so asked and the United States filed an amicus brief

supporting that request, but the full court declined to rehear the case. 625 F.3d 779 (2010). Plaintiffs have

sought Supreme Court review, and the Court has not yet decided whether to grant that review.

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3.3

Statistics on Private and Government Cases Filed

20.

According to the 2010 Annual Report of the Director of the Administrative Office of the U.S.

Courts, 544 new civil antitrust actions, both government and private, were filed in the Federal district

courts during fiscal year 2010. See page 145 of the Report, available at

http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2010/JudicialBusinespdfversion.pdf.

3.4

Significant DOJ and FTC Enforcement Actions

3.4.1

DOJ Criminal Enforcement

21.

Freight Forwarders: On September 30, 2010, the Division announced that six international

freight forwarders had agreed to plead guilty and pay criminal fines totaling $50 million for their roles in

several conspiracies to fix a variety of fees and charges in connection with the provision of freight

forwarding services for international air cargo shipments. Freight forwarders manage the domestic and

international delivery of cargo for customers by receiving, packaging, preparing and warehousing cargo

freight, arranging for cargo shipment through transportation providers such as air carriers and steamship

lines, preparing shipment documentation, and providing related ancillary services. According to charges

filed in U.S. District Court for the District of Columbia, EGL Inc., a Houston-based company; Kühne +

Nagel International AG, based in Switzerland (K+N); Geologistics International Management (Bermuda)

Limited, based in Bermuda; Panalpina World Transport (Holding) Ltd., based in Switzerland; Schenker

AG, based in Germany; and BAX Global Inc., a U.S.-based company, engaged in one or more separate

conspiracies to impose certain charges or fees on customers purchasing international freight forwarding

services for cargo freight destined for air shipment to the United States during various periods between

2002 and 2007. Under the plea agreements, the six companies agreed to pay criminal fines totalling over

$50 million. Each company also agreed to cooperate with the ongoing investigation.

22.

Refrigerant Compressors: On September 30, 2010, the Division announced that Panasonic

Corporation, a Japanese corporation, and Embraco North America Inc., a Whirlpool Corporation

subsidiary, based in the U.S., had agreed to plead guilty and to pay a total of $141 million in criminal fines

for their role in an international conspiracy to fix the prices of refrigerant compressors, which are used in

refrigerators and freezers in homes and businesses. According to charges filed in U.S. District Court in

Detroit, the conspiracy lasted from at least as early as October 14, 2004 until December 31, 2007.

According to the plea agreements, both companies agreed to cooperate with the ongoing investigation, and

Embraco agreed to pay a $92 million criminal fine and Panasonic agreed to pay a $49 million criminal

fine.

23.

Air Cargo: Several additional defendants in FY 2010 agreed to plead guilty or were indicted in

the Division’s ongoing investigation into price-fixing in the air transportation industry. On September 27,

2010, the Division announced that Taiwan-based China Airlines Ltd. had agreed to plead guilty and pay a

$40 million criminal fine for fixing cargo rates charged for international air cargo shipments to and from

the United States between 2001 and 2006. On Sept. 21, 2010, Ms. Maria Christina “Meta” Ullings, senior

vice president of Cargo Sales and Marketing of Martinair Holland N.V., was indicted for participating in a

conspiracy to fix and coordinate certain surcharges on air cargo shipments. On Sept. 2, 2010, Polar Air

Cargo LLC was charged and agreed to enter a guilty plea and pay a fine of $17 million. On August 26,

2010, Mr. Joo Ahn Kang, former president of Asiana, and Mr. Chung Sik Kwak, former vice president of

the Americas region of Asiana, both citizens and residents of the Republic of Korea, were indicted for

participating in a conspiracy to suppress and eliminate competition by fixing passenger airfares for travel

from the United States to Korea. Finally, on August 27, 2010, Northwest Airlines LLC pled guilty and

was sentenced to a $38 million fine for its role in the air transportation price-fixing conspiracy.

DAF/COMP/AR(2011)17

24.

By the end of FY 2010, a total of 18 airlines and eight executives had been charged in the

ongoing investigation into price fixing in the air transportation industry. More than $1.6 billion in criminal

fines had been imposed and four executives had been sentenced to serve prison time. Charges were

pending against the remaining four executives. The airlines that had pleaded guilty, or agreed to plead

guilty, were: British Airways Plc, Korean Air Lines Co. Ltd., Qantas Airways Limited, Japan Airlines

International Co. Ltd., Martinair Holland N.V., Cathay Pacific Airways Limited, SAS Cargo Group A/S,

Société Air France, Koninklijke Luchtvaart Maatschappij N.V. (KLM Royal Dutch Airlines), EL AL Israel

Airlines Ltd., LAN Cargo S.A., Aerolinhas Brasileiras S.A., Cargolux Airlines International S.A., Nippon

Cargo Airlines Co. Ltd., Northwest Airlines LLC, Asiana Airlines Inc., Polar Air Cargo LLC., and China

Airlines Ltd. Airline executives from the following airlines had pleaded guilty: British Airways, Qantas

Airways, Martinair, and SAS Cargo; other executives from SAS Cargo, Asiana, and Martinair Holland

N.V., had been indicted.

25.

Municipal Finance Contracts: The Division announced in FY 2010 a series of indictments and

guilty pleas in its ongoing investigation of bid-rigging and fraud conspiracies related to contracts for the

investment of municipal bond proceeds and other related municipal finance contracts. The conduct, which

took place between approximately 1998 and 2006, involved companies that provide a type of contract,

known as an investment agreement, to state, county, and local governments and agencies throughout the

United States. These government entities seek to invest money from a variety of sources, primarily the

proceeds of municipal bonds that they had issued to raise money for, among other things, public projects.

The companies were hired to act as brokers and conduct a competitive bidding process primarily for

contracts for the investment of the money raised when municipal bonds are issued. The Division alleged

that the companies and their executives secretly manipulated and controlled the bidding process in

numerous ways to enrich themselves and the co-conspirator providers of the investment agreements:

designating in advance which providers would be the winning bidder for certain investment agreements,

submitting intentionally losing bids, paying kickbacks, and unlawfully sharing information about prices or

conditions in competitors’ bids.

26.

By the end of FY 2010, seven individuals had pled guilty in the ongoing municipal bonds

investigation. A former employee of a national bank and three former employees of CDR Financial

Products Inc. (CDR), a California-based financial products and services firm, had pled guilty to bid-rigging

and fraud conspiracies, and three other individuals had pled guilty to related charges. In addition, three

former financial services executives were indicted on July 27, 2010, for participating in fraud schemes and

conspiracies related to the bidding for investment agreements. In October 2009, CDR, two of its

employees and one former employee were charged for participating in bid-rigging and fraud conspiracies

and related crimes. Trial is scheduled for September 12, 2011.

27.

Liquid Crystal Displays: In FY 2010, the Division announced that two companies and four

individuals had agreed to plead guilty, and one company and six of its executives had been indicted, in the

ongoing investigation of price-fixing in the thin-film transistor-liquid crystal display (TFT-LCD) panels

market during the period 2001-2006. TFT-LCD panels are used in computer monitors and notebooks,

televisions, mobile phones and other electronic devices. In 2006, the worldwide market for TFT-LCD

panels was valued at $70 billion. Companies directly affected by the LCD price-fixing conspiracy are

some of the largest computer and television manufacturers in the world, including Apple, Dell and Hewlett

Packard. At the end of FY 2010, more than $890 million in criminal fines had been imposed, and 19

executives and 8 companies had been charged, in the investigation.

28.

On December 9, 2009, the Division announced that Taiwan-based Chi Mei Optoelectronics had

agreed to pay $220 million in criminal fines for its role in the conspiracy. In FY 2010, four former Chi

Mei executives, all residents of Taiwan, agreed to serve jail sentences in the United States ranging from 9

to 14 months and to pay criminal fines between $25,000 and $50,000. On June 29, 2010, the Division

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announced that Taiwan-based HannStar Display Corporation had agreed to pay a $30 million criminal fine

for its role in the conspiracy. On June 10, 2010, the Division announced that a federal grand jury had

indicted AU Optronics Corporation, the largest Taiwanese TFT-LCD panels producer and seller, its U.S.

subsidiary, and six of its Taiwan-resident executives for participation in the conspiracy.

29.

Carbon Brushes – Obstruction Conviction: On July 27, 2010, a federal jury in Philadelphia

convicted Ian P. Norris, the former CEO of The Morgan Crucible Company plc, a UK corporation, of

conspiring with others to obstruct justice. In 2004, a federal grand jury indicted Norris, a UK citizen, on

one count of fixing prices of carbon brushes and other carbon products, one count of conspiring to obstruct

justice, and two counts of obstructing justice in connection with the price-fixing investigation in the carbon

products industry. Carbon products are used to transfer electrical current in automobiles, trains, public

transit vehicles and consumer products and are used in pumps and compressors to contain liquids and

gases.

30.

Norris was extradited to the U.S. in March 2010 on the three obstruction charges. The jury

returned a guilty verdict on the conspiracy to obstruct justice count and not guilty verdicts on the witness

tampering count and the count of corruptly persuading others to destroy or conceal documents. The

conspiracy count carries a maximum penalty of five years in prison and a $250,000 fine. On December 10,

2010, Norris was sentenced to serve 18 months in prison and to pay a criminal fine of $25,000.

31.

The Division alleged that Norris had conspired with his subordinates to obstruct the grand jury’s

investigation. Morgan Crucible employees conspired with Norris to create a false “script” that employees

of both Morgan Crucible and a competitor were to follow when questioned in the investigation. Also, a

“document destruction task force” was formed to collect and destroy or conceal documents from the grand

jury.

32.

More than $11 million in criminal fines have been obtained and four executives and two

companies have pleaded guilty or have been convicted as a result of this investigation. Morgan Crucible

Company plc, based in the U.K., pleaded guilty in 2002 to one count of tampering with witnesses and one

count of document destruction. The company paid a $1 million criminal fine. A U.S.-based former

subsidiary of the company, Morganite Inc., pleaded guilty in 2002 to fixing prices of carbon products and

paid a $10 million fine. In addition, three subordinates of Norris previously pleaded guilty to obstruction

charges.

33.

Iowa Ready-Mix Concrete: On May 24, 2010, the Division announced that the president of an

Iowa ready-mix concrete company had pleaded guilty to participating in a conspiracy to fix prices and rig

bids for the sale of ready-mix concrete sold to various companies in 2008 and 2009. The defendant

participated in a conspiracy in which he engaged in discussions concerning project bids for sales of readymix concrete in Iowa, submitted rigged bids at collusive and noncompetitive prices, and accepted payment

for sales of ready-mix concrete at collusive and noncompetitive prices. In the same investigation of the

concrete industry in Iowa, a former executive of an Iowa concrete company pled guilty on May 4, 2010,

and was sentenced to serve 19 months in jail and pay a criminal fine of $100,000 for his participation in

conspiracies to fix prices and rig bids.

3.4.2

DOJ Civil Non-Merger Enforcement

34.

High Technology Companies and No Solicitation Agreements: On September 24, 2010, the

Department announced that it had reached a settlement with six high technology companies – Adobe

Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc., and Pixar – that would prevent them from

entering into “no solicitation” agreements for employees. The Department filed a civil antitrust complaint

and a proposed settlement in the U.S. District Court for the District of Columbia. The complaint alleged

DAF/COMP/AR(2011)17

that the companies’ actions reduced their ability to compete for high tech workers and interfered with the

proper functioning of the price-setting mechanism that otherwise would have prevailed in competition for

employees. The settlement, which will be in effect for five years, prohibits the companies from engaging

in anticompetitive no solicitation agreements. The settlement prohibits the companies from entering,

maintaining, or enforcing any agreement that prevents any person from soliciting, cold calling, recruiting,

or otherwise competing for employees. The companies also must implement compliance measures tailored

to these practices. See http://www.justice.gov/atr/public/press_releases/2010/262648.htm.

35.

Idaho orthopedics: On May 28, 2010, the Department reached a settlement with the Idaho

Orthopedic Society, an orthopaedic practice group, and five orthopedists that would prohibit them from

conspiring with competing physicians in the Boise, Idaho area to deny medical care to injured workers or

to engage in group boycotts to obtain higher fees. The Department, joined by the Idaho Attorney General’s

office, filed a civil antitrust lawsuit and a proposed settlement in the U.S. District Court for the District of

Idaho against the Idaho Orthopaedic Society, Idaho Sports Medicine Institute, and five individual

orthopedists. The complaint alleged that the defendants and other orthopedists conspired to gain more

favorable fees and other contractual terms by agreeing to coordinate their actions, including denying

medical care to injured workers and threatening to withdraw from healthcare plans offered by Blue Cross

of Idaho. Their conduct caused the state of Idaho and other healthcare consumers to pay higher fees for

orthopedic services. The settlement prevents the defendants from agreeing with their competitors on fees

and contract terms. The settlement also prohibits them from collectively denying medical care to patients,

refusing to deal with any payer, or threatening to terminate contracts with any payer. See

http://www.justice.gov/atr/public/press_releases/2010/259181.htm.

36.

KeySpan Corporation: On February 22, 2010, the Department announced a settlement with

KeySpan Corporation, requiring the company to pay the United States $12 million, as disgorgement of

profit, for violating the antitrust laws by entering into an agreement restraining competition in the New

York City electricity capacity market. The Department filed a civil antitrust complaint and a proposed

settlement in the U.S. District Court for the Southern District of New York. According to the complaint,

KeySpan and a financial services company entered into an agreement in January 2006 that gave KeySpan a

financial interest in the electricity capacity sales of its largest competitor, Astoria. By providing KeySpan

revenues from its competitor’s capacity sales, in addition to its own, the agreement with the financial

services company had the anticompetitive effect of eliminating KeySpan’s incentive to sell its electricity

capacity at lower prices. As a result, retail electricity prices in New York City were likely higher than they

would have been without this anticompetitive agreement. The anticompetitive effects of the agreement

lasted until March 2008, when regulatory conditions eliminated KeySpan’s ability to affect the market

price of electricity capacity. See http://www.justice.gov/atr/public/press_releases/2010/255503.htm.

37.

Microsoft Corporation/Yahoo! Inc.: On February 18, 2010, the Department announced that it

had closed its investigation into the proposed Internet search and paid search advertising agreement

between Microsoft Corporation and Yahoo! Inc. The proposed transaction combined the back-end search

and paid search advertising technology of both parties. U.S. market participants expressed support for the

transaction and believed that combining the parties’ technology would increase competition by creating a

more viable competitive alternative to Google, the firm that dominated these markets at the time. The

transaction between Microsoft Corporation and Yahoo! Inc. was expected to enhance Microsoft’s

competitive performance because it would gain access to a larger set of queries, which would accelerate

the automated learning of Microsoft’s search and paid search algorithms and enhance Microsoft’s ability to

serve more relevant search results and paid search listings. The offices of the Attorneys General of

California and Washington actively participated in the division’s investigation of the proposed transaction.

See http://www.justice.gov/atr/public/press_releases/2010/255377.htm.

DAF/COMP/AR(2011)17

38.

Daily Gazette Company/MediaNews Group Inc.: On January 20, 2010, the Department

announced that it had reached a proposed settlement with the Daily Gazette Company and MediaNews

Group Inc. (now known as Affiliated Media Inc.), that required the companies to restructure their

newspaper joint operating arrangement and take other steps to remedy the anticompetitive effects of a 2004

transaction, which was originally challenged by the Department in May 2007. In May 2007, the

Department had filed a civil antitrust lawsuit alleging that the transaction violated the Clayton and

Sherman Acts by consolidating ownership and control of the only two local daily newspapers in

Charleston, West Virginia under the Daily Gazette Company and eliminating competition between the two

publications. The Department alleged that the transaction was part of a plan by the Daily Gazette

Company to terminate publication of the Charleston Daily Mail and leave Charleston with a single daily

newspaper, the Charleston Gazette. The proposed settlement requires MediaNews Group to regain

independent control over the operations of the Charleston Daily Mail and receive economic incentives to

grow the newspaper. Additionally, the settlement requires the companies to offer substantial discounts of

the Charleston Daily Mail in order to rebuild its subscriber-base and prohibits the Daily Gazette Company

from discriminating against the Charleston Daily Mail in circulation, advertising sales, and other key joint

activities. The settlement also requires the companies to continue publishing the Charleston Daily Mail as

long as it has not failed financially. See http://www.justice.gov/atr/public/press_releases/2010/254282.htm

3.4.3

FTC Non-Merger Enforcement Actions

39.

Intel Corporation. The FTC approved a settlement with Intel Corp. resolving allegations that the

company used anticompetitive tactics to cut off rivals’ access to the market and deprive consumers of

choice and innovation in computer Central Processing Unit (CPU) microchips. The consent order applies

to CPUs, Graphics Processing Units and chipsets and includes key provisions that: prohibit Intel from

conditioning benefits to computer makers in exchange for exclusivity or retaliating against makers if they

do business with non-Intel suppliers; and, requires Intel to modify certain intellectual property agreements,

maintain a key interface for a least six years, disclose that Intel compilers discriminate between Intel and

non-Intel chips and reimburse all software vendors wishing to recompile their software using a non-Intel

compiler. See http://www.ftc.gov/opa/2010/08/intel.shtm.

40.

Realcomp II. On November 2, 2009, the Commission issued an opinion finding that Realcomp

II – a Michigan-based realtors’ group – violated federal law by restricting the ability of member real estate

agents to offer consumers lower-priced alternatives to traditional real estate services. The opinion found

that Realcomp excluded discount real estate listings by refusing to transmit them through its own and other

publicly available Web sites. The Commission found that these policies restricted access to these listings

and harmed competition. The FTC’s Final Order requires Realcomp to provide its members nondiscriminatory access to non-traditional and lower-price listings on its Multiple Listing Service (MLS) and

to stop preventing such listings from being sent to its public real estate sites.

See

http://www.ftc.gov/opa/2009/11/realcomp.shtm. On April 6, 2011, the U.S. Court of Appeals for the 6th

Circuit affirmed the Commission’s opinion.

41.

Minnesota Rural Health Cooperatives. The Minnesota Rural Health Cooperative (MRHC), a

group of approximately 70 doctors and 25 hospitals, representing most of the hospitals and half of the

primary care physicians in southwestern Minnesota, agreed to settle FTC claims that it fixed prices at

which they contract with health insurance plans. The Commission complaint charged MRHC with

eliminating competition among its doctor and hospital members by orchestrating agreements to fix the

prices at which they contract with health insurance plans, and alleged that MRHC refused to deal with

plans that did not agree to its inflated reimbursement rates and used coercive tactics during negotiations.

The settlement, announced in June 2010 (and approved in January 2011), barred the MRHC from using

coercive tactics or refusals to deal to secure favorable contract terms from insurance health plans, and

DAF/COMP/AR(2011)17

required MRHC to renegotiate all existing contracts with health plans and to submit any revised contracts

for state approval. See http://www.ftc.gov/opa/2010/06/ruralhealth.shtm.

42.

Amerco-Avis Budget Group. U-Haul International, Inc. and its parent company settled Federal

Trade Commission charges that they violated the FTC Act by inviting U-Haul’s closest competitor, Avis

Budget Group, Inc., to collude on prices for truck rentals. U-Haul and Budget control more than 70 percent

of the “do-it-yourself” one-way truck rental business in the United States. The FTC’s complaint alleged

that on several occasions between 2006 and 2008, U-Haul tried to increase rates for one-way truck rentals

by privately and publicly communicating with Budget, the second largest truck rental company in the

United States. However, the complaint did not allege that U-Haul and Budget actually reached an

agreement, but according to the FTC, if U-Haul would had succeeded in its price-fixing plan, the two

companies could have imposed higher prices on truck-rental consumers. The FTC order, approved in July

2010, bars U-Haul and its parent company AMERCO from colluding or inviting collusion. Specifically,

the companies are prohibited from inviting a competitor to divide markets, allocate customers, or fix

prices, as well as participating in, maintaining, organizing, implementing, enforcing, offering, or soliciting

any other company to engage in such conduct. The order also includes monitoring and compliance

provisions to ensure that U-Haul and AMERCO comply with its terms.

See

http://www.ftc.gov/opa/2010/06/uhaul.shtm.

43.

North Carolina Dental Board. The FTC issued an administrative complaint on July 17, 2010

alleging that the North Carolina Board of Dental Examiners (the “Dental Board”) harms competition by

blocking non-dentists from providing teeth-whitening services in the state. The FTC charged that the

Dental Board impermissibly ordered non-dentists to stop providing teeth-whitening services, thereby

making it more difficult and expensive for North Carolina consumers to obtain these services. According

to the FTC’s administrative complaint, teeth-whitening services are much less expensive when performed

by non-dentists than when performed by dentists. The case was appealed to an Administrative Law Judge

for hearing, including on state action grounds. See http://www.ftc.gov/opa/2010/06/ncdental.shtm and

http://www.ftc.gov/os/adjpro/d9343/index.shtm.

44.

Transitions Optical, Inc. Transitions Optical, Inc. the nation’s leading manufacturer of

photochromic treatments that darken corrective lenses used in eyeglasses, agreed to stop using

anticompetitive practices to maintain its monopoly and increase prices, under a settlement with the FTC.

Photochromic treatments are applied to eyeglass lenses to protect the eyes from harmful ultraviolet (UV)

light. Treated lenses darken when exposed to UV light and fade back to clear when the UV light

diminishes. The FTC charged that the company illegally maintained its monopoly by engaging in exclusive

dealing at nearly every level of the photochromic lens distribution chain. According to the FTC’s

complaint, Transitions’ exclusionary tactics locked out rivals from approximately 85 percent of the lens

caster market, and partially or completely locked out rivals from up to 40 percent or more of the retailer

and wholesale lab market. The settlement order, approved in April 2010, generally prohibits Transitions

from putting any agreements or policies in place that limit customers’ ability to buy or sell a competing

photochromic treatment, or that require customers to give Transitions’ products more favorable treatment

than a competitor’s product. See http://www.ftc.gov/opa/2010/03/optical.shtm.

45.

Boulder Valley IPA (M. Catherine Higgins). In April 2010, the FTC approved the final

settlement orders in the matters of Boulder Valley Individual Practice Association (BVIPA) and its

executive director, M. Catherine Higgins. BVIPA is a network of about 365 physicians, competing

independently or as members of small group practices. Physicians joining the association signed

agreements authorizing BVIPA to contract on their behalf with health insurers and other third-party payers.

In December 2008, as part of a consent order settling FTC antitrust charges, BVIPA agreed to stop fixing

prices that its member physicians charge users for their services. According to the FTC, after it issued that

order, Executive Director Higgins attempted to evade its terms by representing doctors in negotiations in

DAF/COMP/AR(2011)17

her individual capacity. The Commission complaint and consent order settling the FTC’s charges named

the Executive Director individually, and will prevent her from orchestrating or implementing price-fixing

agreements

among

the

group’s

competing

physicians.

See

http://www.ftc.gov/opa/2010/02/bouldervlly.shtm.

46.

Roaring Fork Valley Physicians, IPA, Inc. Roaring Fork Valley Physicians, IPA, Inc., a

Colorado physicians’ group, settled Commission charges of price-fixing by agreeing to halt its use of

allegedly anticompetitive negotiating tactics against health insurers. The Commission charged Roaring

Fork Valley Physicians I.P.A., Inc., which represents about 80 percent of the doctors in Garfield County,

Colorado, with violating the FTC Act by orchestrating agreements among its members to set higher prices

for medical services and to refuse to deal with insurers that did not meet its demands for higher rates. The

group agreed to terminate its anticompetitive agreements and to notify the FTC before participating in

collaborative arrangements with doctors. See http://www.ftc.gov/opa/2010/02/roaringfork.shtm.

3.5

Advisory Letters from the FTC

47.

Rx 360 International Pharmaceutical Supply Chain Consortium. On September 15, 2010,

FTC staff advised a consortium of pharmaceutical and biotechnology companies that it had no present

intention to recommend that the agency challenge the Consortium’s planned joint supplier quality and

safety audit programs. Under these programs, consortium members were able to share both prior quality

and safety audit information and the costs of sponsoring further quality and safety audits of common

suppliers. However, since it appeared that the audit programs: 1) did not require exchanges of

competitively significant information, 2) contained protections to reduce Rx-360 members’ ability to use

the programs for anticompetitive ends, 3) protected audited firms from concerted misuse of the audit

programs, and 4) were intended and likely to promote efficiency, quality, and safety, FTC staff concluded

that the program likely did not raise significant competitive concerns.

See

http://www.ftc.gov/opa/2010/09/drugfidelity.shtm.

48.

Community CarePartners, Inc. On July 2, 2010, FTC staff issued an opinion letter on whether

Community CarePartners, Inc.’s (“CarePartners”) proposal to extend sales of discounted pharmaceutical

products to its in-home hospice patients would fall within the Non-Profit Institutions Act (“NPIA”)

exemption from the Robinson-Patman Act. The opinion explained that CarePartners was likely an eligible

entity under the NPIA as a non-profit, charitable healthcare organization, noting that it, in fact, already

relies on the NPIA for its purchase and resale of pharmaceuticals to its inpatients. The opinion also found

that the proposal was for CarePartners’ “own use,” to deliver comprehensive and continuing post-acute

health care services, including pharmaceuticals, to all of its patients, and held that the NPIA applies to the

proposal, provided that CarePartners maintained an ongoing relationship with the patients. See

http://www.ftc.gov/os/2010/07/100702carepartnersopinion.pdf.

49.

University of Michigan. On April 9, 2010, FTC staff issued an opinion letter on whether a

prescription-drug benefit program proposed by the University of Michigan would fall within the NonProfit Institutions Act (“NPIA”) exemption from the Robinson-Patman Act, which prohibits anticompetitive price discrimination. The proposed program aimed to allow the University to take advantage

of purchasing discounted pharmaceuticals. Staff found that the program appeared to fall within the NPIA,

given that the University is an eligible institution under the NPIA and that the use of the discounted

pharmaceuticals for University employees, dependents and their families fell within the NPIA’s “own use”

requirement. The letter noted that the program should ensure that for-profit entities would not benefit from

the program. See http://www.ftc.gov/bc/advisoryopinions/100409univmichiganopinion.pdf.

DAF/COMP/AR(2011)17

3.6

Business Reviews Conducted by the Department of Justice

50.

Under the Department’s business review procedure, an organization may submit a proposed

action to the Department and receive a statement as to whether the Department would likely challenge the

action under the antitrust laws. The Department issued three business review letters in FY 2010. These

business review letters can be found at http://www.usdoj.gov/atr/public/busreview/letters.htm.

•

On February 24, 2010, the Department announced it would not challenge a proposal by MyWire

Inc. to form the Global News Service, an online subscription news aggregation service. The

service would provide interconnections among different publishers’ online content, such as news

articles and video and audio clips, that relate to the same topic. Based on representations made

by MyWire, the Department concluded that the formation and operation of the news service

would not be likely to reduce competition among Internet publishers and could provide

procompetitive benefits to both publishers and consumers.

•

On April 1, 2010, the Department announced it would not challenge a proposal by The

Associated Press (AP) to develop and operate a voluntary news registry to facilitate the licensing

and Internet distribution of news content created by the AP, its members, and other news

originators. The Department said that the development and operation of the registry is not likely

to reduce competition among news content owners and could provide procompetitive benefits to

both participating content owners and content users.

•

On April 26, 2010, the Department issued a business review letter stating it would not object to

an information exchange program of Hospital Value Initiative (HVI), a coalition of three

organizations in California representing group purchasers of health care services for more than 7

million people. HVI proposed to provide data on the relative costs and resource efficiency of

more than 300 hospitals in California. HVI would collect, analyze and distribute aggregated

comparative data on the level of reimbursement received, and the resources used, by California

hospitals in providing inpatient and outpatient services. The Department determined that HVI’s

proposal was not likely to produce anticompetitive effects because the exchange would involve

data that was at least 10 months old and the program would not disclose disaggregated data or

any hospital’s actual service fees. HVI’s data exchange program could potentially benefit

consumers by increasing the transparency of the relative costs and resource efficiency of

hundreds of California hospitals.

Enforcement of antitrust laws and policies: mergers and concentrations

4.1

Enforcement of Pre-merger Notification Rules

51.

In United States v. Smithfield Foods, Inc. and Premium Standard Farms, LLC,2 the government’s

complaint alleged that prior to the expiration of the statutory waiting period applicable to Smithfield’s

acquisition of Premium Standard, Premium Standard ceased to exercise independent business judgment in

its hog purchases. Instead, it submitted for Smithfield’s consent each of the contracts for hog purchases

from independent producers that arose during the HSR waiting period. These hog procurement contracts

were necessary to Premium Standard’s ongoing business and entered into in the ordinary course. Through

this conduct, Smithfield exercised operational control over Premium Standard’s hog procurement and

thereby acquired beneficial ownership of a significant segment of Premium Standard’s business. Such

“gun jumping” is prohibited by the Act. Under the terms of a consent decree entered by the Court on

United States v. Smithfield Foods, Inc. and Premium Standard Farms, LLC, No.1:10-CV-00120 (D.D.C.

filed January 21, 2010).

DAF/COMP/AR(2011)17

January 22, 2010, the companies agreed to pay a total of $900,000 to settle the charges.

http://www.justice.gov/atr/cases/smith2.htm.

4.2.

Significant Merger Cases

4.2.1

FTC Merger Challenges and Cases

See

52.

Airgas / Air Products and Chemicals. According to the FTC complaint, Air Products’ proposed

acquisition of Airgas would harm competition in five regional markets for bulk liquid oxygen and bulk

liquid nitrogen, which are used in a range of applications from hospital patient care to the manufacture of

frozen foods. Industrial gas supplier Air Products and Chemicals, Inc. reached an agreement with the

Commission requiring the company to sell certain liquid gas assets to resolve FTC charges. See

http://www.ftc.gov/opa/2010/09/airproducts.shtm.

53.

Tops / Penn Traffic. The Commission reached a settlement agreement with Tops Markets LLC

that protects consumers from the potential anticompetitive effects of Tops’ recent acquisition of the

bankrupt Penn Traffic Company supermarket chain. To settle FTC charges that the acquisition was

anticompetitive in several areas of New York and Pennsylvania, Tops agreed to sell seven Penn Traffic

supermarkets to FTC-approved buyers. Because the FTC adopted a flexible process for reviewing the

potential anticompetitive effects of the acquisition, none of the 79 Penn Traffic stores was liquidated in

bankruptcy proceedings. See http://www.ftc.gov/opa/2010/08/tops.shtm.

54.

Nestle / Novartis AG. The Commission’s complaint challenged Novartis AG’s proposed $28.1

billion acquisition of Alcon, Inc., from Nestle, S.A. The complaint alleged that this acquisition would

lessen competition in the $12.4 million U.S. market for injectable miotics – a class of prescription

pharmaceuticals used to induce miosis (i.e., constriction of the pupil), most commonly during cataract

surgery. Novartis and Alcon each produced an injectable miotics product for which there was no generic

version. Novartis and Alcon were the only suppliers of injectable miotics in the U.S., with respective market

shares of 67% and 33%. The complaint alleged that entry into the market would not be timely, likely, or

sufficient to deter or counteract the anticompetitive effects of the acquisition because, in part, of lengthy FDA

approval requirements and the fact that the market is small and in decline, with limited opportunities for new

entrants. The consent order, issued September 28, 2010, required Novartis to divest its rights and assets in its

injectable miotics product to Bausch & Lomb, Inc., an eye-health company that had not participated in the

U.S. injectable miotics market. See http://www.ftc.gov/opa/2010/08/novartis.shtm.

55.

Ovation Pharmaceuticals, Inc.; FTC v. Lundbeck, Inc. In December 2008, the Commission filed

a complaint in the U.S. District Court for the District of Minnesota, challenging the purchase of the U.S.

rights to NeoProfen – a drug for the treatment of patent ductus arteriosus (“PDA”), a potentially deadly

heart defect affecting premature infants – by Ovation (which was purchased in 2009 and renamed

Lundbeck, Inc.). The Commission’s complaint charged that the purchase eliminated Ovation’s only

competitor for the drug-based treatment of PDA, and thereby preserved Ovation’s U.S. monopoly in the

market for FDA-approved drugs to treat PDA. At the time of the purchase, NeoProfen was awaiting

approval by the FDA. According to the complaint, Ovation expected that NeoProfen, once approved,

would take a substantial portion of sales from Ovation’s PDA drug, Indocin, and that Ovation acquired

NeoProfen to eliminate this threat. The complaint charged that, after acquiring the rights to NeoProfen,

Ovation raised the price of Indocin by nearly 1,300%; and when Ovation launched NeoProfen, it set the

price at virtually the same level. At the time of the complaint, Ovation had maintained prices for the two

drugs at or above this level for more than two years. The complaint charged that Ovation’s acquisition of

NeoProfen substantially raised prices, reduced competition, and maintained Ovation’s monopoly in PDA

drug treatments in violation of Section 7 of the Clayton Act and Section 5(a) of the FTC Act. The

complaint sought equitable relief, including divestiture and disgorgement of unlawfully obtained profits

DAF/COMP/AR(2011)17

from Ovation’s sales of Indocin and NeoProfen. On August 31, 2010, the district judge held that the

plaintiffs had not proved that NeoProfen and Indocin compete in the same product market, and, therefore,

had failed to demonstrate that the acquisition substantially lessened competition or maintained a monopoly.

As a result, the court dismissed both actions. See http://www.ftc.gov/os/caselist/0810156/index.shtm.

The case is on appeal to United States Court of Appeals for the Eighth Circuit.

56.

NuFarm / A.H. Marks Holdings, Ltd. Australian chemical company Nufarm Limited agreed to

sell certain assets and modify some of its business agreements to settle charges that its 2008 acquisition of

rival A.H. Marks Holding Limited hurt competition in the U.S. market for three herbicides that are relied

upon by farmers, landscapers, and consumers. Under the settlement, Nufarm will sell rights and assets

associated with two of the herbicides to competitors and will modify agreements with two other companies

to allow them to fully compete in the market for the other herbicide. According to the FTC’s complaint,

Nufarm’s acquisition of United Kingdom-based A.H. Marks gave Nufarm monopolies in the U.S. markets

for two herbicides called MCPA and MCPP-P, which also are known as phenoxy herbicides, and the

transaction also left only two competitors in the market for a third phenoxy herbicide, called 2,4DB. See

http://www.ftc.gov/opa/2010/07/nufarm.shtm.

57.

Fidelity / LandAmerica. To settle FTC charges that its 2008 acquisition of three LandAmerica

Financial, Inc. subsidiaries was anticompetitive, Fidelity National Financial, Inc. agreed to sell several title

plants and related assets in the Portland, Oregon, and Detroit, Michigan, metropolitan areas, and in four

other Oregon counties. Title plants are databases used by abstractors, title insurers, title insurance agents,

and others to determine the ownership of, and interests in, real property in connection with underwriting

and issuance of title insurance policies and for other purposes. According to the FTC’s complaint and

order, Fidelity’s acquisition of the LandAmerica assets reduced competition in six geographic areas for the

provision of title insurance information services by title plants, and the settlement would replace the

competition lost through Fidelity’s acquisition of LandAmerica’s title insurance subsidiaries. The order

also required Fidelity to notify the FTC before acquiring 50 percent or more of any joint title plant in

California, Colorado, Nevada, New Mexico, Oregon, and Texas, states in which Fidelity’s acquisition of

LandAmerica’s subsidiaries had increased Fidelity’s ownership interest in title plants. See

http://www.ftc.gov/opa/2010/07/fidelity.shtm.

58.

AEA Investors / Wilh.Werhahn. Houghton International, Inc., the leading North American

provider of hot rolling oil used to process aluminum, agreed to sell some of the assets it acquired in 2008

through its purchase of D.A. Stuart GmbH, a transaction that included multiple product markets. The

FTC’s investigation found that Houghton’s acquisition of D.A. Stuart GmbH combined the two largest

suppliers of aluminum hot rolling oil (AHRO) in North America, giving the combined firm control of

almost 75 percent of the North American market. The FTC’s complaint alleged that, through its purchase

of Stuart, Houghton the acquisition could have substantially lessened competition by, inter alia,

unilaterally raising AHRO prices to U.S. consumers and/or decreasing innovation for this vital input into

aluminum manufacturing. Under the order settling the FTC’s charges, Houghton agreed to sell Stuart’s

AHRO business to Quaker Chemical Corporation. See http://www.ftc.gov/opa/2010/07/houghton.shtm.

59.

Flying J / Big West Oil. The FTC required Pilot Corporation, owner of the largest travel center

network in the United States, to sell 26 locations as part of a settlement that will replace the competition

lost due to Pilot’s proposed $1.8 billion acquisition of Flying J Inc.’s travel center network. Pilot agreed to

sell the travel centers, which provide diesel, food, parking, and other amenities for truckers, to Love’s

Travel Stops and Country Stores, the smallest national travel center operator, currently concentrated in the

South. According to the FTC’s complaint, the deal between Pilot and Flying J would have reduced

competition for certain long-haul trucking fleets for which Pilot and Flying J were the first and second best

choices for their diesel needs. See http://www.ftc.gov/opa/2010/06/flying.shtm.

DAF/COMP/AR(2011)17

60.

Varian, Inc. / Agilent, Inc. To settle anticompetitive concerns arising from their $1.5 billion

merger, Agilent Technologies, Inc. and Varian, Inc., two leading global suppliers of high-performance

scientific measurement instruments, agreed to sell three of their product lines. According to the FTC’s

complaint, Agilent’s acquisition of Varian would have allowed Agilent to raise prices, decrease innovation

or reduce customer services for three types of scientific measurement instruments for which the companies

competed with one another. To resolve these competitive concerns, the parties agreed to sell assets related

to the manufacture and sale of: 1) Micro Gas Chromatography (Micro GC) instruments; 2) Triple

Quadrupole Gas Chromatography-Mass Spectrometry (3Q GC-MS) instruments; and 3) Inductively

Coupled

Plasma-Mass

Spectrometry

(ICP-MS)

instruments.

See

http://www.ftc.gov/opa/2010/05/agilent.shtm.

61.

MDR (The Dun & Bradstreet Corp) / QED. The FTC issued an administrative complaint on

May 7, 2010 challenging The Dun & Bradstreet Corporation’s February 2009 acquisition of Quality

Education Data (QED) and alleging that the transaction harmed consumers by eliminating nearly all

competition in the market for kindergarten through twelfth-grade educational marketing databases. The

data sold by these companies is used to sell books, education materials, and other products to teachers and

other educators nationwide. The combination of the two companies gave Dun & Bradstreet, through its

subsidiary Market Data Retrieval (MDR), more than 90 percent of the market for K-12 educational

marketing data. Dun & Bradstreet acquired QED from Scholastic, Inc. for about $29 million, which was

below the threshold amount that would have required the companies to notify U.S. antitrust authorities

before finalizing the deal. See http://www.ftc.gov/opa/2010/05/mdr.shtm. MDR agreed to sell the QUED

assets to a third party in September 2010.

62.

Google/Admob Investigation Closed. On May 21, 2010, the FTC closed its investigation of

Google’s proposed acquisition of mobile advertising network company AdMob after concluding that the

deal was unlikely to harm competition in the emerging market for mobile advertising networks. In its

statement, the Commission said that although the combination of the two leading mobile advertising

networks raised serious antitrust issues, the agency’s concerns ultimately were overshadowed by recent

developments in the market, most notably a move by Apple Computer Inc. – the maker of the iPhone – to

launch its own, competing mobile ad network. In addition, a number of firms appear to be developing or

acquiring smartphone platforms to better compete against Apple’s iPhone and Google’s Android, and these

firms would have a strong incentive to facilitate competition among mobile advertising networks. See

http://www.ftc.gov/opa/2010/05/ggladmob.shtm.

63.

SCI / Keystone North America. Service Corporation International (SCI), the largest U.S.

provider of funeral and cemetery services, settled Commission charges that its proposed acquisition of

Keystone North America Inc. (Keystone), the fifth-largest funeral and cemetery services provider in North

America, raised antitrust concerns in the markets for both funeral services and cemetery services. SCI

agreed to sell 22 funeral homes and four cemeteries in 19 local markets to ensure that competition is

preserved following its acquisition of Keystone. See http://www.ftc.gov/opa/2010/03/keystone.shtm.

64.

PepsiCo Inc./Pepsi Bottling and Coca-Cola/Coca-Cola Enterprise. As part of separate

settlement agreements, PepsiCo and the Coca-Cola Company each agreed to restrict access to

commercially sensitive business information of rival Dr Pepper Snapple Group as a condition for

completing their respective proposed acquisitions of their largest North American bottlers, which also

distribute some of the carbonated soft drink brands of Dr Pepper Snapple Group in specific geographic

areas in the United States. Under their respective settlements with the FTC, both PepsiCo, Inc., and The

Coca-Cola Company agreed to create a “firewall” to ensure that only specific bottling operations personnel

from each of PepsiCo., Inc., and The Coca-Cola Company obtain access to commercially sensitive

confidential Dr Pepper Snapple information. In complaints filed with the settlements, the FTC alleged that

DAF/COMP/AR(2011)17

access to this information likely would have harmed competition in the U.S. markets for carbonated soft

drinks. See http://www.ftc.gov/opa/2010/02/pepsi.shtm and http://www.ftc.gov/opa/2010/09/coke.shtm.

65.

Agrium / CF Industries. Agricultural products supplier Agrium Inc. agreed to a settlement that

will allow the company to move forward with its acquisition of competitor CF Industries Holdings, Inc.

The proposed consent order settles charges that the acquisition would have eliminated competition between

the two firms, in the Pacific Northwest and two Illinois markets, in the anhydrous ammonia fertilizer

market. To address the FTC’s concerns, Agrium agreed to divest identified anhydrous ammonia terminals

in the Pacific Northwest and Northern Illinois and to rescind its rights to market anhydrous ammonia

produced by Rentech at Rentech’s East Dubuque, Illinois manufacturing facilities.

See

http://www.ftc.gov/opa/2009/12/agrium.shtm.

66.

Watson Pharmaceuticals / Arrow Group. The Commission alleged that Watson

Pharmaceuticals, Inc.’s acquisition of Robin Hood Holdings Limited, owner of Arrow Pharmaceuticals,

would have harmed consumers by eliminating future competition for important generic drugs used to treat

Parkinson’s disease (cabergoline) and the side effects of chemotherapy (dronabinol). The Commission’s

order, issued on January 7, 2010, required the firms to sell assets related to the two drugs to FTC-approved

buyers and to ensure that the acquirers have the means to compete effectively in the future. See

http://www.ftc.gov/opa/2009/12/watsonarrow.shtm.

67.

SCI / Palm Mortuary. The Commission challenged Service Corporation International's (SCI)

proposed acquisition of Las Vegas rival Palm Mortuary, Inc. The Commission required that SCI, the

nation’s largest cemetery operator and the third-largest provider of cemetery services in Las Vegas,

Nevada, to sell a cemetery and related funeral home in Las Vegas to complete its proposed acquisition of

Palm. See http://www.ftc.gov/opa/2009/11/sci.shtm.

68.

Panasonic / Sanyo. Major consumer electronics manufacturers Panasonic Corporation and

Sanyo Electric Co., Ltd. agreed to sell Sanyo’s portable nickel metal hydride (NiMH) battery business

related assets, including a premier manufacturing facility in Japan, to allow the firms to proceed with their

proposed $9 billion transaction. NiMH batteries power two-way radios, among other products, which are

used by police and fire departments nationwide. The FTC alleged that the transaction combined the

world’s two largest manufactures and sellers of these batteries, and ordered Sanyo to sell the assets to FDK

Corporation, a subsidiary of Fujitsu Ltd. See http://www.ftc.gov/opa/2009/11/sanyo.shtm.

69.

Merck / Schering-Plough. The Commission challenged Schering-Plough’s proposed $41.4

billion acquisition of Merck & Co., and required divestitures to preserve competition in markets for certain

human and animal pharmaceuticals in order that the transaction could proceed. The FTC’s complaint

alleged that the companies were the two leading animal health suppliers in the U.S., and that the

acquisition raised significant concerns in markets in which Merck, through Merial Limited, and ScheringPlough competed directly. It also alleged that the transaction raised competitive concerns with regard to

human drugs identified as NK 1 receptor antagonists, with Merck having the first and only such drug

approved for human use to treat common side effects of both chemotherapy and surgery and ScheringPlough in the process of licensing its drug to a third party. The FTC believed it likely that the transaction

would have reduced the combined firm’s incentives to launch Schering-Plough’s drug. The parties agreed

to a consent order requiring that Merck sell its interest in Merial Limited, an animal health joint venture

with Sanofi-Aventis S.A., and that Schering-Plough sell its assets related to significant drugs for nausea

and vomiting in humans. See http://www.ftc.gov/opa/2009/10/merck.shtm.

70.

Pfizer Inc. / Wyeth. The Commission challenged Pfizer Inc.’s proposed $68 billion acquisition

of Wyeth and required significant divestitures to preserve competition in multiple U.S. markets for animal

pharmaceuticals and vaccines. The FTC’s complaint alleged that the proposed transaction would harm

DAF/COMP/AR(2011)17

competition in these markets by reducing the number of suppliers and leaving veterinarians and other

animal health product customers with limited supply options, particularly given that entry of new

competitors would not would not be timely, likely or sufficient to offset the loss of competition. The

consent order, approved on January 29, 2011, remedies the anticompetitive effects the Commission

believed were likely to result from the transaction in numerous markets for animal vaccines and animal

pharmaceutical products. The Commission concluded that the transaction did not raise anticompetitive

concerns in any human health product markets. See http://www.ftc.gov/opa/2009/10/pfizer.shtm.

71.

Danaher Corp. / MDS. The Commission challenged Danaher’s proposed acquisition of MDS

Analytical Technologies, requiring that MDS divest the assets related to its laser microdissection device

business to Life Technologies. The Commission’s complaint provided that these parties were two of four

North American suppliers for these products, and alleged that the transaction would result in increased

prices and decreased innovation. The proposed settlement is designed to preserve competition in the North

American market for laser microdissection devices – a key tool for scientific research. See

http://www.ftc.gov/opa/2010/01/danaher.shtm.

4.2.2

DOJ Merger Challenges and Cases

72.

United Airlines/Continental Airlines: On August 27, 2010, the Division closed its investigation

into the proposed merger of UAL Corporation, the parent of United Airlines Inc. (“United”), and

Continental Airlines Inc. (“Continental”). The decision was made in light of an agreement by United and

Continental to transfer takeoff and landing rights and other assets at Newark Liberty Airport to Southwest

Airlines Co. (“Southwest”). The proposed merger will combine the airlines’ largely complementary

networks, which will result in overlap on a limited number of routes where United and Continental offer

competing nonstop service. The largest such routes were between United’s hub airports and Continental's

hub at Newark airport, where Continental had a high share of service and where there was limited

availability of slots, making entry by other airlines particularly difficult. Southwest is a low cost carrier

that previously had no service to Newark airport. Continental’s transfer of slots and other assets at Newark

Airport to Southwest Airlines resolved the Division’s principal competition concerns.

See

http://www.justice.gov/atr/public/press_releases/2010/262002.htm.

73.

Baker Hughes/BJ Services: In United States v. Baker Hughes Incorporated and BJ Services

Company, the Division challenged the proposed $5.5 billion acquisition of BJ Services by Baker Hughes.

The complaint alleged that the acquisition, as originally proposed, would likely substantially lessen

competition by combining two of only four companies that provide specialized pumping services, called

vessel stimulation services, necessary for the production of oil and gas from wells in the U.S. Gulf of

Mexico. These critical services prevent sand from interfering with the flow of oil and gas from wells in the

Gulf and are performed using specially designed and equipped vessels that are operated by experienced

crews and supported by scientists, engineers and other lab technicians who customize the stimulation job

for the specific well formation. The Division filed a proposed consent decree simultaneously with the

complaint, requiring divestiture of two vessels used for providing stimulation services. The court approved

the decree on July 26, 2010. See United States v. Baker Hughes Incorporated and BJ Services Company,

No. 1:10-CV-00659 (D.D.C. filed April 27, 2010).

74.

Cisco/Tandberg: On March 29, 2010, the Division announced it had closed its investigation into

Cisco Systems Inc.’s (“Cisco”) acquisition of Tandberg ASA (“Tandberg”). The Division had analyzed

the effect of combining the videoconferencing businesses of Cisco and Tandberg, focusing on a type of

videoconferencing known as “telepresence,” in which Cisco and Tandberg are competitors. Telepresence

is a form of high-definition videoconferencing that provides an immersive experience to users, simulating

face-to-face meetings. During the course of its investigation, the Division cooperated closely with the

European Commission (“EC”) in its review of the transaction, aided by waivers from the parties and

DAF/COMP/AR(2011)17

industry participants. As part of the EC’s merger review process, Cisco made commitments to facilitate

interoperability between its telepresence products and those of other companies. The commitments were

designed to foster the development of open operating standards, which lower barriers to entry and can be

especially procompetitive in rapidly evolving high technology markets. The Division concluded that the

proposed deal was not likely to be anticompetitive, given the evolving nature of the videoconferencing

market and the commitments that Cisco made to the EC to facilitate interoperability.

See

http://www.justice.gov/atr/public/press_releases/2010/257173.htm.

75.

Election Systems & Software/Premier Election Solutions: In United States et al. v. Election

Systems and Software, Inc., the Division, joined by nine state attorneys general (Arizona, Colorado,

Florida, Maine, Maryland, Massachusetts, New Mexico, Tennessee and Washington), challenged the 2009

acquisition of Premier Election Solutions, Inc. and PES Holdings, Inc. (collectively, “Premier”) by

Election Systems and Software, Inc. (“ES&S”). The complaint alleged that the acquisition substantially

lessened competition in the market for voting equipment systems, as it combined the two largest providers

of systems used to tally votes in federal, state and local elections in the United States. As a result of the

acquisition, which did not require notification under the HSR Act because its $5 million value fell below

the Act’s size threshold, ES&S became the provider of more than 70 percent of the voting equipment

systems in the United States. The Division filed a proposed consent decree simultaneously with the

complaint. The decree, which was entered by the court on June 30, 2010, required that ES&S divest the

Premier voting equipment systems assets it had acquired, including the means to produce all versions of

Premier's hardware, software and firmware used to record, tabulate, transmit or report votes. See United

States et al. v. Election Systems and Software, Inc., No.1:10-CV-00380 (D.D.C. filed March 8, 2010).

76.

Blue Cross Blue Shield/Physicians Health Plan: On March 8, 2010, the Division announced

that Blue Cross Blue Shield of Michigan’s (“Blue Cross-Michigan”) subsidiary, Blue Care Networks of

Michigan, had abandoned its attempt to purchase Physicians Health Plan of Mid-Michigan (“PHP”) after

the Division informed the companies that it would file an antitrust lawsuit to block the acquisition. Blue

Cross-Michigan and PHP are the two largest providers of commercial health insurance in the Lansing,

Michigan area. Blue Cross-Michigan holds almost a 70 percent market share in Lansing and PHP is its

largest competitor, with approximately a 20 percent market share. Had the acquisition gone forward, Blue

Cross-Michigan would have gained control of nearly 90 percent of the commercial health insurance market

in the Lansing, Michigan area. The acquisition would have resulted in higher prices, fewer choices, and a

reduction in the quality of commercial health insurance plans purchased by Lansing area residents and their

employers. The acquisition also would have given Blue Cross-Michigan the ability to control physician

reimbursement rates in a manner that could harm the quality of health care delivered to consumers. See

http://www.justice.gov/atr/public/press_releases/2010/256259.htm.

77.

Bemis/Alcan Packaging Food: In United States v. Bemis Company, Inc., Rio Tinto plc and

Alcan Corporation, the Division challenged the proposed $1.2 billion acquisition of the Alcan Packaging

Food Americas business by Bemis Co. from Rio Tinto, the parent of Alcan Corporation. The complaint

alleged that the acquisition, as originally proposed, likely would have substantially lessened competition in

the development, production, and sale of flexible-packaging rollstock for chunk, sliced and shredded

natural cheese packaged for retail sale and flexible-packaging shrink bags for fresh meat in the United

States and Canada. Flexible packaging products for natural cheese and fresh meat are unique in that they

must meet strict performance standards to prevent spoilage, maintain product appearance, operate properly

on customers’ packaging equipment, and adhere to unique standards specific to the particular products. As

a result, these types of flexible packaging are difficult to manufacture and commercialize successfully.

The Division filed a proposed consent decree simultaneously with the complaint. Under the terms of the

decree, Bemis was required to divest certain assets, including plants and intellectual property, used in the

production and sale of flexible packaging for natural cheese and fresh meat. The court entered the decree

DAF/COMP/AR(2011)17

on July 13, 2010. See United States v. Bemis Company, Inc., Rio Tinto plc and Alcan Corporation, No.

1:10-CV-00295 (D.D.C. filed February 24, 2010).

78.

Ticketmaster/Live Nation: In United States et al. v. Ticketmaster Entertainment, Inc. and Live

Nation, Inc., the Division, joined by 17 state attorneys general (Arizona, Arkansas, California, Florida,

Illinois, Iowa, Louisiana, Massachusetts, Nebraska, Nevada, Ohio, Oregon, Pennsylvania, Rhode Island,

Tennessee, Texas, and Wisconsin), challenged the acquisition of Live Nation by Ticketmaster

Entertainment. The complaint alleged that the transaction, as originally proposed, would be likely to

lessen competition substantially for primary ticketing services to major concert venues located in the

United States, and thus likely to result in higher prices and less innovation for consumers. Primary

ticketing services, such as websites, call centers and retail networks from which tickets may be purchased,

facilitate the initial sale of tickets to concertgoers. Ticketmaster was the largest primary ticketing company

in the United States, and Live Nation, the largest concert promoter in the United States, had entered the

market for primary ticketing services in December, 2008. A proposed consent decree was filed

simultaneously with the complaint, settling the suit. Under the terms of the decree, entered by the court on

July 30, 2010, the merged firm must license ticket software and divest ticketing assets to two companies,

Anschutz Entertainment Group and either Comcast-Spectacor or another buyer suitable to the Division,

allowing both companies to compete head-to-head with the merged firm. The decree also prohibits the

merged firm from engaging in certain conduct, such as retaliating against any venue owner that chooses to

use another company’s ticketing services, and requires firewalls to protect confidential and valuable

competitor data by preventing the merged firm from using information gleaned from its ticketing business

in its day-to-day operations of its promotions or artist management business. The Division cooperated

closely with the Canadian Competition Bureau throughout the investigation, and the two agencies worked

together to obtain the same remedy. See United States et al. v. Ticketmaster Entertainment, Inc. and Live

Nation, Inc., No. 1:10-CV-00139 (D.D.C. filed January 25, 2010).

79.

Dean Foods: In United States et al. v. Dean Foods Company, the Division and the States of

Illinois, Michigan, and Wisconsin filed a lawsuit in January 2010 seeking to undo Dean’s April 2009

acquisition of the Consumer Products Division of Foremost Farms USA, which included two dairy

processing plants located in Wisconsin. Dairy processors, such as Dean and Foremost, purchase raw milk

from dairy farms and agricultural cooperatives and then pasteurize and package the milk for sale to school

districts, supermarkets and other commercial customers. The complaint alleged that the acquisition was

likely to substantially lessen competition both in the sale of school milk to individual school districts

located throughout Wisconsin and the Upper Peninsula of Michigan and in the sale of fluid milk to

purchasers located in those areas and in Northeastern Illinois. Dean and Foremost were the first and fourth

largest sellers of school milk and fluid milk in the region, and the acquisition resulted in Dean making

more than 57% of fluid milk sales. Because the acquisition was valued at $35 million, premerger

notification to the federal antitrust agencies under the HSR Act had not been required. On March 29, 2011,

the Division announced that it had reached a settlement with Dean Foods.

International antitrust cooperation and outreach

5.1

International Antitrust Cooperation Developments

80.

The Agencies continued to play a lead role in promoting cooperation and convergence towards

sound competition policies internationally, through both building strong bilateral ties with their major

enforcement partners and their participation in multilateral bodies such as the International Competition

Network (ICN), the Competition Committee of the Organisation for Economic Cooperation and

Development (OECD), the United Nations Conference on Trade and Development (UNCTAD), the AsiaPacific Economic Cooperation (APEC), and the Transpacific Strategic Economic Partnership (TPP).

DAF/COMP/AR(2011)17

81.

On November 10, 2009, the Agencies signed a Memorandum of Understanding (MOU) on

antitrust cooperation with the Russian Federal Antimonopoly Service (FAS). See a more complete

discussion in the 2009 Annual Report on Competition Policy Developments in the U.S, at

http://www.ftc.gov/bc/international/docs/usannualreport09.pdf.

82.

The FTC worked on almost 40 international antitrust investigations in 2010, many of which

involved coordination or cooperation with non-U.S. counterparts. Significant examples from this year

include the Panasonic/Sanyo matter, in which the Commission worked with counterparts in the EU,

Canada, and Japan to resolve competitive concerns raised by Panasonic’s proposed acquisition of Sanyo.

In the Pfizer/Wyeth matter the FTC cooperated with the competition agencies of Australia, Canada, the EU,

Mexico, New Zealand, and South Africa to address competitive concerns raised by Pfizer’s acquisition of

Wyeth with respect to a wide variety of animal health products, including vaccines.

83.

In FY 2010, the Division coordinated/cooperated with competition agencies in other jurisdictions

in the vast majority of dozens of ongoing international cartel investigations, and worked on almost 40 civil

investigations with an international dimension, most of which involved some level of coordination or

cooperation. Significant examples of cooperation, which extended to agencies located in five continents,

include Cisco/Tandberg, where the Division cooperated extensively with the European Commission (see

supra at paragraph 74), and Ticketmaster/Live Nation, where the Division worked closely with the

Canadian Competition Bureau (see supra at paragraph 78).

84.

In FY 2010, the Agencies continued to play a lead role in the ICN. The FTC co-chairs the

Unilateral Conduct Working Group, which held its second workshop and two webinars on differential

pricing and abuse of dominance in the pharmaceutical sector. The Group also issued the first chapter of the

Unilateral Conduct Workbook, which addresses assessing dominance. Commissioner William E. Kovacic

served as ICN’s Vice-Chair for Outreach. As vice chair, Commissioner Kovacic and Randolph Tritell,

Director of the FTC Office of International Affairs, led the ICN Curriculum Project, which developed

training materials that will serve as a virtual university on competition law and practice for competition

agency

officials

(see

http://www.internationalcompetitionnetwork.org/working-groups/vicechair/outreach/icncurriculum.aspx . The FTC also chairs the Merger Notification and Procedures

subgroup, which held a webinar on promoting implementation of its Recommended Practices on merger

notification and review procedures.

85.

The Division co-chaired the ICN’s Merger Working Group, which had a very active 2010,

headlined by ICN’s adoption of new recommended practices for merger analysis on market definition and

failing firm analysis. The group also organized a workshop on merger policy and procedure in Rome and

facilitated substantive dialogue through teleseminars on topics including merger guidelines developments

in the U.S. and UK and discussion of relevant considerations in assessing merger remedies. The Merger

Working Group also began a comprehensive assessment of the use of its existing work product and ideas

for the group’s future direction as part of the strategy review for the path for ICN’s second decade. The

Legal Framework subgroup of the Cartel Working Group, co-chaired by the Division, addressed the timely

topics of the criminalization of hard-core cartel conduct and effective cartel awareness and outreach efforts

through two Division-organized series of widely-attended substantive discussion calls. The subgroup also

compiled the world’s largest collection of cartel awareness and outreach materials used by agencies. The

working group continued its annual international cartel enforcer workshops covering policy discussions

and training techniques in October 2010, a series started by the Division in Washington in 1999.

86.

In September 2010, the U.S. Federal Trade Commission, together with competition agencies

from Mexico, Chile and Panama, helped to found of the Inter-American Competition Alliance to foster

antitrust enforcement cooperation in the Americas. Both U.S. agencies have actively participated in the

Alliance’s informal monthly teleconferences to share experience and understanding.

DAF/COMP/AR(2011)17

5.2

Outreach

87.

In FY 2010, the Agencies continued to provide technical assistance on competition law and

policy matters to their international antitrust enforcement counterparts. The FTC’s international technical

assistance antitrust programs conducted 31 missions in almost 30 countries. As part of U.S. efforts to assist

China as it implements its new antitrust laws, senior FTC and DOJ officials and staff held discussions with

the Chinese antitrust agencies in the United States and China. The Agencies’ staff, together with U.S.

judges, also provided antitrust training to over 70 judges from China’s Supreme Peoples Court. The

Agencies are also working with India’s Competition Commission as it begins to implement its 2002

Competition Act and new merger regime. The Agencies’ training missions included programs in Thailand,

El Salvador, Morocco, Singapore, Paraguay, Tanzania, Kenya and Hungary. The FTC placed long-term

resident advisors in Vietnam and India. Recognizing the importance and quality of the FTC’s work in this

regard, Congress provided the FTC additional funding to provide international technical assistance.

88.

As part of its ongoing effort to build effective relationships, the FTC provides opportunities for

counterparts from non-U.S. agencies to spend several months working directly with FTC staff on

investigations, subject to appropriate confidentiality protections. The FTC’s International Fellows and

Interns program is based on the FTC’s U.S. SAFE WEB Act authority, which also enables the FTC to send

staff members to work in non-U.S. competition agencies. In FY 2010, the FTC hosted 13 International

Fellows and Interns from Canada, Egypt, France, Kazakhstan, South Africa, South Korea, Peru,

Switzerland, the United Kingdom, and Vietnam. It also sent FTC staff to work in two non-U.S.

competition agencies: the U.K. Competition Commission and Competition Bureau Canada. These

assignments provide valuable opportunities for participants to obtain a deep understanding of their

international partners’ laws and challenges. This knowledge provides critical support for coordinated

enforcement and promotes convergence toward sound policy. In 2010, the Department hosted visiting

antitrust delegations from Latin America, Egypt, and Panama for in-depth meetings with a range of

litigating, policy, and economic sections.

Regulatory and Trade Policy Matters

6.1

Regulatory Policies

6.1.1

FTC Staff Activities: Federal and State Regulatory Matters

89.

Utilities, Electricity. On September 29, 2010, the FTC submitted a comment concerning the

Federal Energy Regulatory Commission’s (FERC) Notice of Proposed Rulemaking (NOPR), which aimed

at encouraging needed transmission construction through clearer, non-discriminatory rules on transmission

planning, investment, and cost allocation. The FTC comments focused on three issues raised by the NOPR.

First, the comments noted that the regional and inter-regional joint transmission planning envisioned by the

NOPR likely would result in discussions and collaborations among competitors, as well as with customers.

The FTC highlighted that although such interactions are not immune from antitrust scrutiny, the antitrust

laws are not a barrier to competitors’ (or competitors’ and customers’) ability to work together in

procompetitive ways. Second, the FTC encouraged elimination of transmission incumbents’ right of first

refusal, not only for projects proposed through the regional transmission planning process, but also for

transmission planning processes for individual transmission systems. Additionally, the FTC encouraged

FERC to ensure that the standards set for participation in transmission projects by incumbents and nonincumbents alike are not exclusionary in favor of the incumbents. Finally, with respect to the NOPR’s cost

allocation proposals, the FTC encouraged FERC to seek broad consensus on cost allocation. See

http://www.ftc.gov/opa/2010/10/ferc.shtm.

DAF/COMP/AR(2011)17

90.

Gasoline Prices. On September 24, 2010, the FTC provided comments in support of a New

Jersey State Senate Bill that would modify current law to allow gasoline retailers to set their prices below

cost to meet competition. The FTC encouraged the passage of the Bill explaining that, if adopted, the Bill

would permit gasoline retailers to meet a rival’s price even if that price fell below the retailer’s costs. The

FTC stated the Bill would likely encourage more aggressive price competition, which would benefit New

Jersey consumers through lower gasoline prices. See http://www.ftc.gov/opa/2010/09/gasolinepepsi.shtm.

91.

Veterinarians. On August 20, 2010, the FTC filed a comment with the Texas Board of

Veterinary Medical Examiners concerning the Board’s proposed rule on animal teeth floating – the

practice of filing the outer contours of an animal’s teeth. The FTC comment observed that: 1) the rule

would prohibit any non-veterinarian from floating the teeth of animals with motorized or air-powered files

except under the direct supervision of a licensed veterinarian; 2) under the current rules, no such

supervision is required; 3) FTC Staff is not aware of any evidence justifying this new restraint as a measure

to protect animal well-being or otherwise benefit purchasers of teeth floating services; 4) the restraint

would eliminate important competition between veterinarian and non-veterinarian teeth floaters, likely

reducing Texas consumers’ choices and increasing the prices paid for floating. For these reasons, the FTC

urged the Board not to adopt the proposed rule unless the Board had credible evidence that the benefits to

purchasers of teeth floating would be greater than the harm that would result from the elimination of

competition. http://www.ftc.gov/opa/2010/09/texvetnufarm.shtm.

92.

Utilities, Electricity. On April 8, 2010, the FTC submitted a comment on integration of variable

energy resources (“VERs”) issued by FERC. The subject of the comments focused on (i) potential

discrimination against VERs; (ii) existing provisions that could serve as barriers to VERs and to their

integration; and (iii) reliability. In its comment, the FTC urged FERC to structure electricity markets to

accommodate VERs so that the electricity system will allow existing generators and new technologies to

compete to deliver the greatest net benefits to society. The FTC encouraged active demand-side

involvement as a technique for integrating VERs into the electric power system. Furthermore, the FTC

recommended that FERC should integrate analysis of how markets and institutions can best harness

demand- and supply-side resources in such context. Finally, the FTC: 1) applauded FERC's efforts to

improve supply forecasts where benefits exceed the costs; 2) encouraged FERC to examine whether small

balancing authorities lead to higher integration costs or VERs from the perspective that integration of

VERs can be less costly if the geographic scale of the balancing authority is sufficient to include VERs

whose low-generation periods are unlikely to coincide with each other; and 3) recommended that FERC

consider ways in which capacity markets can support a transition from the status quo thermal system to a

future system in which VERs and consumer participation in demand response play a larger role, and in

which administrative interventions such as price caps and capacity markets are less important. See

http://www.ftc.gov/opa/2010/04/ferc.shtm.

93.

Utilities, Electricity. On March 29, 2010, the FTC provided comments in response to FERC’s

NOPR, which would amend its regulations in two respects. First, it would expand blanket authorizations

under the Federal Power Act (FPA) for acquisitions and transfers of certain voting securities. Second, it

would modify the definition of “affiliate” under FERC’s regulations concerning the standards for grants of

market-based rate authority under the FPA. In its comment, the FTC recommended that FERC should

strengthen the proposed rule’s certifications to protect against the adverse risks associated with changed

competitive incentives caused by partial acquisitions, especially among competitors. Accordingly, the FTC

urged FERC to address these concerns by adding two certifications to the NOPR: that “[n]either the

reporting person nor any of its employees, officers, or investors competes in the same product and

geographic markets as the issuer,” and that “[n]either the reporting person nor any of its employees,

officers, or investors owns, controls, or is affiliated with an entity that owns or controls ‘inputs to electric

power production’…serving the same product and geographic markets as the issuer.)”, aiming to provide

DAF/COMP/AR(2011)17

structural safeguards against the range of adverse competitive effects associated with partial acquisitions.

See http://www.ftc.gov/opa/2010/04/boulderelectric.shtm.

94.

Utilities, Electricity. On March 19, 2010, the FTC submitted a comment to FERC on regional

transmission organization (RTO) and independent system operator (ISO) performance metrics. The FTC

recommended that FERC select performance metrics that will accurately evaluate the degree to which

RTOs display required characteristics and perform their required functions. The FTC further urged FERC

to explicitly address the risk of potential distortions in RTO performance that may result from flawed or

incomplete performance metrics. The FTC also recommended that FERC consider adding to the minimum

characteristics and functions of RTOs a requirement to operate efficiently, including being responsive to

grid users and the retail customers they serve. See http://www.ftc.gov/opa/2010/04/boulderelectric.shtm.

95.

Health Care. On January 28, 2010, in response to a request from Kentucky Cabinet for Health

and Family Services (“Cabinet”), the FTC filed a comment on the proposed regulation of limited service

clinics (LSCs) in Kentucky. The FTC comment observed that a proposed rule contains three categories of

regulatory provisions that were likely to raise competitive concerns. The first involves limits on the scope

of professional services that may be provided at an LSC – limits that do not apply to the same credentialed

professionals in comparable limited care settings. The second involved certain physical or operational

restrictions that do not apply to comparable limited care clinics. The third involved mandatory licensing

fees in excess of those required of any other health care facility. Furthermore, the FTC noted that no

justifications were offered to outweigh the competitive ramifications of these rules. Accordingly, the FTC

urged the Cabinet not to adopt those regulatory provisions and suggested the consideration of two

alternative approaches. First, to avoid unnecessary costs and restrictions on LSCs, the Cabinet could strike

needlessly disparate requirements from the final rule. Alternatively, the Cabinet could consider whether

LSC scope of service, physical plant, and operations requirements could be better specified through

amendments to Kentucky’s existing licensing rules for health care clinics.

See

http://www.ftc.gov/opa/2010/02/mjk.shtm.

96.

Dentistry. On December 18, 2009, the FTC filed a comment with the Louisiana State Board of

Dentistry concerning the Board’s proposed amendments to its rules on the practice of “portable and mobile

dentistry”. The amendments would allow dentists to bring their portable, self-contained offices to the

consumer. According to the comment, the FTC was concerned that some of the proposed amendments

discriminated between mobile and office-based dentistry by making access to dental treatment in a mobile

setting more difficult with the consequent denial of access to dental care for many Louisianan children.

Furthermore, the FTC stated that these proposals did not seem to be calculated to provide Louisiana

citizens with any countervailing benefits. For these reasons, the FTC urged the Board of Dentistry to

modify the sections of the proposed rules which would likely make it more difficult for mobile dentists to

operate. See http://www.ftc.gov/opa/2009/12/dentalferc.shtm.

97.

Utilities, Electricity. On December 11, 2009, the FTC submitted a comment on the “Possible

Elements of National Action Plan on Demand Response: A Discussion Draft” (“Action Plan”) issued by

FERC. The Action Plan discussed programs that empower consumers to reduce the cost of operating

electricity system and share in the savings. The FTC hailed the Action Plan for its price-based and

administrative approaches; its emphasis on consumer research; and its recognition that renewable, weathersensitive generation technologies create new roles and challenges for demand-side programs. Nonetheless,

the FTC recommended that: 1) FERC should consider expanding each of these approaches and offer

concrete plans to support dynamic pricing; 2) the Action Plan should focus on understanding end-users and

how their needs change the optimal design of the response programs in which they will be key players; 3)

the Action Plan should support creation of infrastructure and processes that will support beneficial

competition, entry, learning, and innovation. See http://www.ftc.gov/opa/2009/12/dentalferc.shtm.

DAF/COMP/AR(2011)17

98.

Utilities, Electricity. On December 3, 2009, the FTC submitted a comment concerning issues of

transmission planning and transmission cost allocation, in response to FERC’s request for comment. In its

comment, the FTC explained that transmission planning is most likely to be effective when the geographic

scope of the planning process matches the geographic scope of power flows. The FTC encouraged FERC

to require ongoing transmission planning at the Interconnection level in order to facilitate the most

effective and efficient transmission planning regime for the U.S. The FTC urged FERC to foster consistent,

Interconnection-wide cost allocation approaches and to refine its use of data and analysis so as to yield

reasonable choices, while also acknowledging that the future holds unavoidable uncertainties. See

http://www.ftc.gov/opa/2009/12/basf.shtm.

99.

Health Care. In December 2009, the FTC provided comments to the Department of Health and

Human Services’ Centers for Medicare & Medicaid Services (HHS) concerning a proposed HHS Rule

which, among other things, improves the plan information that enrollees in Medicare Advantage (MA)

plans and Medicare prescription drug benefit (PDP) plans use to identify and select the plan that best suits

their needs. In its comment, the FTC encouraged HHS to require plan sponsors to make standardized

information about plan features and other tools available to consumers before they choose a plan in order

to reduce search costs and facilitate competition. Moreover, the FTC encouraged HHS to explore ways in

which it can release timely, plan-specific data to third parties to allow them to experiment with different

ways to analyze claims and performance data to assist consumers with the identification, selection, and use

of their MA and PDP plans based on plan performance or quality attributes. The comment states that if

consumers can easily access information they need to make informed decisions, their purchase decisions

will

better

reflect

their

needs

and

competition

will

enhanced.

See

http://www.ftc.gov/opa/2009/12/hhs.shtm.

6.1.2

DOJ Activities: Federal and State Regulatory Matters

100.

On October 14, 2009, AAG Varney testified before the Senate Judiciary Committee in a hearing

on “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry.” She

concluded that the Department “generally supports the idea of repealing antitrust exemptions,” noting that

“[t]here are strong indications that possible justifications for the broad insurance antitrust exemption in the

McCarran-Ferguson Act when it was enacted in 1945 are no longer valid today.” Her testimony is

available at http://www.justice.gov/atr/public/testimony/250917.htm. As part of health care reform during

the 111th Congress, the Department worked with Congress by providing this testimony along with analysis

of legislation that included repeal of the McCarran-Ferguson Act as it applies to the business of health

insurance, and worked with the White House to issue a Statement of Administration Policy

(http://www.whitehouse.gov/sites/default/files/omb/legislative/sap/111/saphr4626r_20100223.pdf)

support of the legislation that passed the House of Representatives overwhelmingly by a vote of 406 to 19.

101.

On March 24 and April 5, 2010, the Department filed comments before the Federal Aviation

Administration (FAA) with respect to the FAA’s decision whether to grant a waiver for the permanent

exchange between Delta Air Lines and US Airways of more than 300 slots at LaGuardia and Ronald

Reagan Washington National Airports. The Department’s comments noted that the transaction would

reduce competition and make entry by low cost carriers and others less likely at the two airports, depriving

consumers of lower fares and vigorous competition, but that the FAA’s proposed condition of slot

divestitures, by opening up the airports to entry by carriers that traditionally found it difficult to purchase

slots, would protect consumers from competitive harm. See comments filed with the FAA at

http://www.justice.gov/atr/public/comments/comments.html#faa.

102.

On December 21, 2009, the Department filed comments with the Department of Transportation

(DOT) on the joint application of American Airlines, British Airways, Iberia, Finnair, and Royal Jordanian

Airlines for approval of and antitrust immunity for their alliance agreements. The Department concluded

DAF/COMP/AR(2011)17

that the proposed agreements would result in competitive harm on certain transatlantic routes serving 2.5

million passengers annually. Fares between six pairs of cities could increase up to 15% under the proposed

agreements. According to the comments, the airlines claimed substantial benefits would flow from an

expanded alliance, but they failed to show that immunity was necessary to achieve these benefits. The

Department recommended that DOT impose conditions – slot divestitures or carveouts, as appropriate – on

a grant of immunity to protect the public interest in competition.

See comments filed at

http://www.justice.gov/atr/public/comments/253575.htm.

103.

On January 4, 2010, the Department filed ex parte comments with the Federal Communications

Commission (FCC) on broadband competition. The Department concluded that broadband is a cornerstone

of growth and innovation in the 21st century economy, and that as part of the development of a broadband

plan, the FCC should evaluate what strategies would best promote the development of an affordable and

innovative broadband infrastructure in the United States. The comments suggested that these broad goals

are best served by promoting competition in broadband markets. In practice, this does not mean striving

for broadband markets that look like textbook markets of perfect competition, with many price-taking

firms. That market structure is unsuitable for the provision of broadband services, which involve very

substantial fixed and sunk costs. Rather, promoting competition is likely to take the form of enabling

additional entry and expansion by wireless broadband providers, applying other appropriate policy levers,

and spurring competition among broadband providers by improving the information available to

consumers about the service offerings in their areas.

The comments are available at

http://www.justice.gov/atr/public/comments/253393.htm.

104.

On June 3, 2010, the Department filed comments with the Federal Maritime Commission (FMC)

supporting a proposal to broaden an exemption from statutory ocean transportation tariff publication

requirements for non-vessel-operating common carriers (NVOCCs) to include short-term “spot market”

agreements between NVOCCs and shippers. The Department noted that the proposed exemption would

allow NVOCCs to be more flexible in a dynamic contractual environment, thereby allowing them to be

more responsive to their shippers’ needs. It would likely promote competition and commerce by

eliminating substantial regulatory costs to NVOCCs, a savings that could be passed on to their shipper

customers in the form of lower shipping rates.

The comments are available at

http://www.justice.gov/atr/public/comments/259366.htm#_ftn2.

6.1.3

DOJ and FTC Trade Policy Activities

105.

Both the Division and the FTC are involved in interagency discussions and decision-making with

respect to the formulation and implementation of U.S. international trade and investment policy as

concerns competition policy. The Agencies participate in interagency trade policy discussions chaired by

the Office of the U.S. Trade Representative, and provide antitrust and other legal advice to U.S. trade

agencies. The Division also works with other Department components (including the Civil, Criminal, and

Environment and Natural Resources Divisions) on international trade and investment issues that affect

those components or the Department as a whole.

106.

Both the FTC and Division participate in bilateral and multilateral discussions and projects to

improve cooperation in the enforcement of competition laws. The Agencies also participate in negotiations

and working groups related to regional and bilateral trade agreements. The Division and the FTC

participate in competition policy discussions associated with APEC and the Trans-Pacific Partnership

negotiations. The Agencies are active participants in the annual UNCTAD Intergovernmental Group of

Experts meetings on competition topics of interest to developing as well as developed countries, and they

have also followed the competition and intellectual property component of the World Intellectual Property

Organization’s (“WIPO”) Committee on Development and Intellectual Property.

DAF/COMP/AR(2011)17

New Studies Related to Antitrust Policy

7.1

Joint Conferences and Reports

107.

Horizontal Merger Guidelines Workshops. During December 2009 and January 2010, the FTC

and the Division held a series of five joint public workshops to explore the possibility of updating the

Horizontal Merger Guidelines that are used by both agencies to evaluate the potential competitive effects

mergers

and

acquisitions.

information

available

http://www.ftc.gov/bc/workshops/hmg/index.shtml. After the workshops, the proposed updated guidelines

were circulated for public comment in April 2010, and issued in final format in August 2010.

108.

The Intersection of Patent Policy and Competition Policy. On May 26, 2010, the Department,

FTC, and the Department of Commerce’s Patent and Trademark Office (PTO) held a joint public

workshop in Washington on the intersection of patent policy and competition policy and its implications

for promoting innovation. One panel of experts examined how challenges posed by the patent backlog

affect the competitive strategies of patent applicants and innovators. Another expert panel examined the

impact of the Supreme Court’s opinion in eBay Inc. v. MercExchange L.L.C., 547 U.S. 388 (2006), on

permanent injunctions for patent infringement in district courts and at the U.S. International Trade

Commission. Finally, a third panel evaluated the role of patents in connection with industry standards and

the

impact

such

standards

have

competition.

See

and

http://www.justice.gov/atr/public/workshops/ip/index.html

http://www.ftc.gov/bc/workshops/ipmarketplace/.

7.2

FTC Conferences, Reports, and Economic Working Papers

7.2.1

Conferences and Workshops

109.

How will Journalism Survive the Internet Age? On June 15, 2010, the FTC held its third and

final workshop on “the future of journalism.” Topics explored included: the economics of journalism on

the Internet and in more traditional media; how the business models of different types of news

organizations may evolve in response to the challenges associated with the Internet; and how competition

may evolve in markets for journalism and advertising. Workshop participants presented a wide range of

views from stakeholders that included bloggers, online publishers and traditional media companies. The

FTC plans to issue a report based on these workshops.

More information is available at

http://www.ftc.gov/opp/workshops/news/index.shtml.

110.

Second Annual FTC and Northwestern University Microeconomics conference. On

November 19-20, 2009, the Federal Trade Commission's Bureau of Economics, and Northwestern

University’s Searle Center on Law, Regulation and Economic Growth, and Center for the Study of

Industrial Organization hosted a conference to bring together scholars working in industrial organization,

information economics, game theory, quantitative marketing, consumer behavior, law and economics,

behavioral and experimental economics, and other areas related to the FTC’s antitrust, consumer protection

and

public

policy

missions.

information

available

http://www.ftc.gov/be/workshops/microeconomics/2009/index.shtm.

7.2.2

Studies and Reports

111.

Pay-For-Delay: How Drug Company Pay-Offs Cost Consumers Billions. In January 2010,

FTC staff issued a study evaluating and summarizing assesses the losses U.S. consumers incurred during

the past six years through pay-for-delay deals in the drug industry. The study found the number such payfor-delay agreements to have increased from zero in 2004 to a record of 19 agreements in Fiscal Year

2009. The study reported that, on average, these potential pay-for-delay agreements precluded generic

DAF/COMP/AR(2011)17

entry for 48 months. On average, agreements with compensation from the brand company to the generic

producer prohibit generic entry for nearly 17 months longer than agreements without payments. Most of

these agreements are still in effect, and they currently protect at least $20 billion in sales of brand-name

pharmaceuticals from generic competition. See http://www.ftc.gov/opa/2010/01/payfordelay.shtm.

112.

The U.S. SAFE WEB Act. In December 2009, FTC staff issued a report to Congress

summarizing how the agency used the expanded law enforcement authority over the three years since the

U.S. SAFE WEB Act to protect American Consumers was signed into law. The report provides

information on a wide range of matters mandated by Congress, including data on the number of crossborder complaints received by the Commission; a description of specific cases in which the FTC worked

cooperatively with foreign agencies; the number of times the FTC issued compulsory process on behalf of

foreign agencies; and implementation of the agency’s International Fellows Program. See

http://www.ftc.gov/opa/2009/12/safeweb.shtm.

7.2.3

Bureau of Economics Working Papers

113.

The FTC’s Bureau of Economics issued the following working papers during FY 2010. The

papers are available at http://www.ftc.gov/be/econwork.htm.

•

David J. Balan and Dan Hanner, Job Insecurity isn’t Always Efficient, September 2010.

•

James C. Cooper and Joshua D. Wright, State Regulation of Alcohol Distribution: The Effects of

Post & Hold Laws on Consumption and Social Harms, August 2010.

•

Paul Zimmerman, John M. Yun and Christopher T. Taylor, Edgeworth Price Cycles in Gasoline:

Evidence from the U.S., June 2010.

•

Matthew Chesnes, Asymmetric Pass-Through in U.S. Gasoline Prices, June 2010.

•

Brett Wendling and Steven Tenn, Entry Threats and Pricing in the Generic Drug Industry, June

2010.

•

Louis Silvia and Christopher T. Taylor, Petroleum Mergers and Competition in the Northeast

United States, April 2010.

•

Dan O’Brien and Ian Gale, The Welfare Effects of Use-or-Lose Provisions in Markets with

Dominant Firms, February, 2010.

•

Christopher J. Metcalf and John D. Simpson, Competition, Contracts, and Innovation, December

2009.

7.3

DOJ Conferences, Reports, and Economic Working Papers

7.3.1

Conferences and Workshops

114.

In 2010, the Department and the U.S. Department of Agriculture (USDA) held five joint public

workshops around the U.S. to explore competition issues affecting the agricultural sector in the 21st

century and the appropriate role for antitrust and regulatory enforcement in that industry. These were the

first joint Department of Justice/USDA workshops ever to be held to discuss competition and regulatory

issues in the agriculture industry. The goals of the workshops were to promote dialogue among interested

parties and foster learning with respect to the appropriate legal and economic analyses of these issues as

DAF/COMP/AR(2011)17

well as to listen to and learn from parties with real-world experience in the agricultural sector. The

workshops addressed the dynamics of competition in agriculture markets, including buyer power

(monopsony) and vertical integration. They examined legal doctrines and jurisprudence, as well as current

economic learning, and provided an opportunity for farmers, ranchers, consumer groups, processors,

agribusiness, and other interested parties to provide examples of potentially anticompetitive conduct and to

discuss any concerns about the application of the antitrust laws to the agricultural sectors.

7.3.2

Department of Justice Economic Analysis Group Discussion Papers

115.

The DOJ Economic Analysis Group issued the following papers during FY 2010. The papers are

available at http://www.usdoj.gov/atr/public/eag/discussion_papers.htm.

•

The 2010 Horizontal Merger Guidelines: From Hedgehog to Fox in Forty Years, Carl Shapiro

(Published in 77 Antitrust Law Journal 701, (2010)).

•

Cumulative Innovation and Competition Policy, Alexander Raskovich and Nathan H. Miller,

EAG 10-5, September 2010.

•

A Theory of Quality Competition in Newspaper Joint Operating Agreements, Charles J. Romeo

and Aran Canes, EAG 10-4, July 2010.

•

Filling Out the Instrument Set in Mixed Logit Demand Systems for Aggregate Data, Charles J.

Romeo, EAG 10-3, April 2010.

•

Competition Among Spatially Differentiated Firms: An Empirical Model with an Application to

Cement, Nathan H. Miller and Matthew Osborne, EAG 10-2, March 2010.

•

The Economics of Railroad “Captive Shipper” Legislation, Russell Pittman, EAG 10-1, January

2010 (Published in Administrative Law Review (2010)).

•

The Entry Incentives of Complementary Producers: A Simple Model with Implications for

Antitrust Policy, Juan S. Lleras and Nathan H. Miller, EAG 09-7, November 2009.

•

Competition Issues in Restructuring Ports and Railways, Including Brief Consideration of these

Sectors in India, Russell Pittman, EAG 09-6, November 2009 (Published in International Journal

of Regulation and Governance (2009)).

DAF/COMP/AR(2011)17

APPENDICES

Department of Justice: Fiscal Year 2010 FTE3 and Actual Resources by Enforcement Activity

FTE

Amount ($ in thousands)

Criminal Enforcement

319

$67,584

Civil Enforcement

478

$101,376

Total

797

$168,960

Federal Trade Commission: Fiscal Year 2010 Competition Mission

FTE and Dollars by Program, Bureau & Office

FTE

Amount ($ in thousands)

Total Maintain Competition Mission

511.9

$118,971.2

Bureau of Competition

274.8

$46,452.8

Bureau of Economics

73.1

$11,978.8

Regional Offices

28.4

$5,081.1

Mission Support

135.6

$55,458.5

Premerger Notification

Bureau of Competition

Bureau of Economics

Regional Offices

32.0

31.6

0.0

0.4

$4,795.8

$4,733.2

$0.0

$62.6

Merger & Joint Venture Enforcement

Bureau of Competition

Bureau of Economics

Regional Offices

178.2

123.9

39.8

14.5

$29,701.8

$20,839.2

$6,413.5

$2,449.1

Merger & Joint Venture Compliance

Bureau of Competition

Bureau of Economics

Regional Offices

4.0

3.9

0.1

---

$592.8

$576.7

$16.1

---

Nonmerger Enforcement

Bureau of Competition

Bureau of Economics

Regional Offices

130.4

96.7

21.4

12.3

$21,968.4

$16,247.1

$3,465.8

$2,255.5

Nonmerger Compliance

Bureau of Competition

Bureau of Economics

Regional Offices

2.8

0.0

---

$414.9

$0.0

---

An “FTE” or “full time equivalent” amounts to one employee working full time for a full year. Because the

number of employees fluctuates throughout the year through hiring, attrition, and varying schedules, an

agency typically has more employees than FTEs (e.g. two employees working 20 hours per week for one

full year equals one FTE).

DAF/COMP/AR(2011)17

Antitrust Policy Analysis

Bureau of Competition

Bureau of Economics

Regional Offices

FTE

7.3

--7.3

---

Other Direct

Bureau of Competition

Bureau of Economics

Regional Offices

21.6

15.9

4.5

1.2

$4,833.4

$3,641.7

$877.8

$313.9

Support

135.6

$55,458.5

Amount ($ in thousands)

$1,205.6

--$1,205.6

---

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.