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DAF/COMP/AR(2014)24
Organisation de Coopération et de Développement Économiques
Organisation for Economic Co-operation and Development
17-Jun-2014
___________________________________________________________________________________________
English - Or. English
Directorate for Financial and Enterprise Affairs
COMPETITION COMMITTEE
DAF/COMP/AR(2014)24
Unclassified
ANNUAL REPORT ON COMPETITION POLICY DEVELOPMENTS IN THE UNITED STATES
-- 2013 -
18-19 June 2014
This report is submitted by the United States to the Competition Committee FOR INFORMATION at its
forthcoming meeting to be held on 18-19 June 2014.
English - Or. English
JT03359512
Complete document available on OLIS in its original format
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of
international frontiers and boundaries and to the name of any territory, city or area.
DAF/COMP/AR(2014)24
TABLE OF CONTENTS
1.
Introduction .......................................................................................................................................... 3
1.1
Senior Leadership Update ........................................................................................................... 3
2.
Changes in law or policies ................................................................................................................... 3
2.1
Changes in Antitrust Rules, Policies, or Guidelines ................................................................... 3
2.2
Proposals to Change Antitrust Laws, Related Legislation or Policies ........................................ 4
3.
Enforcement of antitrust law and policies: actions against anticompetitive practices ......................... 4
3.1
Staffing and Enforcement Statistics ............................................................................................ 4
3.1.1 FTC ......................................................................................................................................... 4
3.1.2 DOJ ......................................................................................................................................... 5
3.2
Antitrust Cases in the Courts ...................................................................................................... 5
3.2.1 United States Supreme Court .................................................................................................. 5
3.2.2 U.S. Court of Appeals Cases ................................................................................................... 6
3.3
Statistics on Private and Government Cases Filed...................................................................... 7
3.4
Significant Enforcement Actions ................................................................................................ 7
3.4.1 DOJ Criminal Enforcement .................................................................................................... 7
3.4.2 DOJ Civil Non-Merger Enforcement.................................................................................... 10
3.4.3 FTC Non-Merger Enforcement Actions ............................................................................... 11
3.5 Advisory Letters from the FTC ...................................................................................................... 12
3.6
Business Reviews Conducted by the DOJ ................................................................................ 13
4.
Enforcement of antitrust laws and policies; mergers and concentrations .......................................... 13
4.1
Enforcement of Pre-merger Notification Rules ........................................................................ 13
4.2
Select Significant Merger Matters ............................................................................................ 14
4.2.1 FTC Public Merger Investigations and Challenges .............................................................. 14
4.2.
DOJ Public Merger Investigations and Challenges .............................................................. 17
5.
International antitrust cooperation and outreach ................................................................................ 19
5.1
International Antitrust Cooperation Developments .................................................................. 19
5.2
Outreach .................................................................................................................................... 21
6.
Regulatory and Trade Policy Matters ................................................................................................ 22
6.1
Regulatory Policies ................................................................................................................... 22
6.1.1 DOJ Activities: Federal and State Regulatory Matters ......................................................... 22
6.1.2 FTC Staff Activities: Federal and State Regulatory Matters ................................................ 23
6.1.3 DOJ and FTC Trade Policy Activities .................................................................................. 25
7.
New Studies Related to Antitrust Policy ............................................................................................ 25
7.1
Joint Conferences and Reports.................................................................................................. 25
7.2
FTC Conferences, Reports, and Economic Working Papers .................................................... 25
7.2.1 Conferences and Workshops ................................................................................................. 25
7.2.2 Bureau of Economics Working Papers ................................................................................. 26
7.3
DOJ Economic Working Papers ............................................................................................... 26
7.3.1 DOJ Economic Analysis Group Discussion Papers .............................................................. 26
APPENDICES ............................................................................................................................................. 27
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1.
Introduction
1.
This report describes federal antitrust developments in the United States for the period of October
1, 2012 through September 30, 2013 (“FY 2013”).1 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 2013, see the FTC’s Annual Highlights 2013, available at
http://www.ftc.gov/reports/annual-highlights-2013, and the DOJ’s Spring 2014 Division Update, available
at http://www.justice.gov/atr/public/division-update/2014/index.html.
1.1
Senior Leadership Update
2.
On January 3, 2013, William J. Baer was sworn in as Assistant Attorney General (“AAG”) for
the Division, following confirmation by the U.S. Senate. Prior to his arrival, Deputy Assistant Attorney
General (“DAAG”) for Criminal and Civil Operations Renata B. Hesse served as Acting AAG after the
November 16, 2012 resignation of Acting AAG Joseph F. Wayland. DAAG Leslie C. Overton began
supervising the Division’s international program in April 2013, upon the departure of Rachel
Brandenburger, the Special Advisor for International Matters; also at this time, Patricia A. Brink, Director
of Civil Enforcement, took on the role of coordinating civil case cooperation. Aviv Nevo became DAAG
for Economic Analysis on March 31, 2013. David I. Gelfand became DAAG for Litigation on August 26,
2013, and Brent Snyder became DAAG for Criminal Enforcement on November 26, 2013.
3.
President Obama designated FTC Commissioner Edith Ramirez to serve as Chairwoman,
effective March 4, 2013. FTC Chairman Jon Leibowitz resigned in February 2013. On January 11, 2013,
after confirmation by the U.S. Senate, Joshua Wright was sworn in as Commissioner. On April 9, 2014,
the U.S. Senate confirmed President Obama’s nomination of Terrell McSweeny as Commissioner.
4.
On June 17, 2013, Chairwoman Ramirez appointed Deborah L. Feinstein as Director of the
FTC’s Bureau of Competition, Jessica Rich as Director of the Bureau of Consumer Protection, and
Jonathan E. Nuechterlein as General Counsel. On September 9, 2013, Chairwoman Ramirez appointed
Martin S. Gaynor as Director of the Bureau of Economics.
2.
Changes in law or policies
2.1
Changes in Antitrust Rules, Policies, or Guidelines
5.
Changes to Premerger Notification Rules. On November 6, 2013, the FTC, after public
comment and with the concurrence of the Division, issued changes to the premerger notification rules that
require companies in the pharmaceutical industry to report certain proposed acquisitions of exclusive
patent rights to the FTC and DOJ for antitrust review. The revised rules provide a framework for
determining when a transfer of exclusive rights to a patent or part of a patent in the pharmaceutical
industry results in a potentially reportable asset acquisition under the Hart-Scott-Rodino Act. See
http://www.ftc.gov/news-events/press-releases/2013/11/ftc-finalizes-amendments-premerger-notification
rules-related.
6.
Changes to Carve-out Practice Regarding Corporate Plea Agreements. On April 12, 2013,
AAG Baer issued a statement on changes to the Division’s carve-out practice regarding corporate plea
1
In some sections of the Report, e.g., the following section on Senior Leadership Update, more recent
information is provided.
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agreements in criminal cases. Previously, in appropriate cases, corporate plea agreements included a
provision offering non-prosecution protection to those employees who cooperated with the investigation
and whose conduct did not warrant prosecution. The Division excluded, or carved out, employees who
were believed to be culpable. In certain circumstances, it also carved out employees who refused to
cooperate with the Division’s investigation, employees against whom the Division was still developing
evidence, and employees with potentially relevant information who could not be located. The names of all
carved-out employees were included in the corporate plea agreements, which were publicly filed in the
district courts where the charges were brought. As a result of the announced changes, the Division no
longer carves out employees for reasons unrelated to culpability, and the Division will not include the
names of carved-out employees in the plea agreement itself. Those names will instead be listed in an
appendix
to
be
filed
with
the
court
under
seal.
See
http://www.justice.gov/atr/public/press_releases/2013/295747.htm.
2.2
Proposals to Change Antitrust Laws, Related Legislation or Policies
7.
On July 23, 2013, FTC Chairwoman Ramirez testified before Congress, expressing concern
about anticompetitive “pay-for-delay” agreements in the pharmaceutical industry. Chairwoman Ramirez
stated that following the Supreme Court decision in FTC v. Actavis, Inc., which held that pay-for-delay
agreements are subject to a rule of reason analysis (see Section 3.2.1 below), the FTC will continue to
challenge anticompetitive “pay-for-delay” agreements in court, and continue to support legislation that
would make these agreements presumptively illegal to enhance clarity, create a stronger deterrent effect,
and help the FTC move more quickly to stop these harmful agreements. See http://www.ftc.gov/public
statements/2013/07/prepared-statement-federal-trade-commission-pay-delay-deals-limiting.
3.
Enforcement of antitrust law and policies: actions against anticompetitive practices
3.1
Staffing and Enforcement Statistics
3.1.1
FTC
8.
During FY 2013, the FTC employed approximately 538 staff and spent approximately $113.4
million in furtherance of its Maintaining Competition mission.
9.
During FY 2013, 1,286 proposed mergers and acquisitions were reported for review under the
HSR Act, a 10.0 percent decrease from the number of HSR transactions reported during FY 2012. The
Commission staff issued requests for additional information (“second requests”) in 25 transactions. The
Commission challenged 23 mergers, 16 of which were settled with consent orders, two in which the
transaction was abandoned or restructured as a result of antitrust concerns raised during the investigation,
four in which the Commission initiated administrative litigation, and one in which the Commission filed a
complaint in federal court seeking permanently to enjoin the merger.
10.
During FY 2013, the FTC staff opened 23 non-merger initial phase investigations. The
Commission brought four non-merger enforcement actions, each of which was resolved by a consent order.
11.
The Commission filed amicus curiae briefs in 11 cases (one before the Supreme Court and ten
before federal appeals and district courts). The Commission provided three advisory opinions (see Section
3.5 below) and submitted 14 advocacy filings (see http://www.ftc.gov/policy/advocacy).
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3.1.2
DOJ
12.
At the end of FY 2013, the Division had 611 employees: 310 attorneys, 45 economists, 115
paralegals, and 141 other professional staff. For FY 2013, the Division received an appropriation of $159
million.
13.
During FY 2013, the Division opened 92 investigations and filed 62 civil and criminal cases in
federal district court.
14.
During FY 2013, the Division filed 50 criminal cases, in which it charged a total of 21
corporations and 34 individuals with federal crimes. The Division obtained just over $1 billion in criminal
fines against 24 corporate defendants and 29 individuals. Twenty-eight individuals were sentenced to a
total of 20,999 days of incarceration; the courts imposed an average sentence of just over two years per
defendant.
15.
During FY 2013, the Division investigated 65 mergers and challenged seven of them in court; 8
transactions were restructured or abandoned prior to the filing of a complaint as a result of an
announcement by the Division that it would otherwise challenge the transaction. In addition, the Division
screened a total of 511 bank mergers. The Division opened 75 civil investigations (merger and nonmerger), and issued 338 civil investigative demands (a form of compulsory process). The Division filed
five non-merger civil complaints. Also during FY 2013, the Division issued four business review letters.
3.2
Antitrust Cases in the Courts
3.2.1
United States Supreme Court
16.
On June 17, 2013, the U.S. Supreme Court decided FTC v. Actavis, a “pay-for-delay” case
concerning the testosterone-replacement drug AndroGel. On February 2, 2009, the FTC filed a complaint
in federal district court challenging agreements in which Solvay Pharmaceuticals, Inc. paid generic drug
makers Watson Pharmaceuticals, Inc., Paddock Laboratories, Inc., and Par Pharmaceutical Companies, Inc.
to delay generic competition to Solvay’s branded testosterone-replacement drug AndroGel, a prescription
pharmaceutical with annual sales of more than $400 million. The complaint alleged that the companies
violated the antitrust laws when Solvay paid the generic firms millions of dollars annually in exchange for
their agreements to abandon their patent challenges to Solvay’s drug and to refrain from marketing a
generic version of AndroGel until 2015. The District Court dismissed the complaint, and the Eleventh
Circuit Court of Appeals affirmed.
17.
The Supreme Court reversed the decision of the Court of Appeals. Ruling in favor of the FTC,
the Court held that an agreement to settle patent-related litigation was not immune from antitrust attack just
because the anticompetitive effects of the agreement fell within the exclusionary scope of the patent.
Instead, the Court ruled that antitrust challenges to such agreements should be decided by assessing their
competitive effects and evaluating whether the claimed justifications are legitimate, using a “rule of
reason” analysis.
18.
On June 30, 2013, the Supreme Court decided American Express Co. v. Italian Colors
Restaurant, in which it enforced an arbitration provision incorporating a class-action waiver to bar a class
action antitrust suit. The plaintiffs were merchants who alleged that American Express had used its
monopoly over charge cards to force them to pay 30 percent more so they could accept its credit cards, and
that this was an unlawful tying arrangement. American Express’s agreement with the merchants included
a requirement that any disputes over it be arbitrated and barred class arbitration. The Court held that the
bar on class arbitration was enforceable under the Federal Arbitration Act, rejecting the plaintiffs’
argument that the maximum any one of them could expect to recover was less than $40,000 after trebling.
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DAF/COMP/AR(2014)24
The Court acknowledged that the provision effectively precluded individual – and thus any – claims, but
thought that the antitrust laws do not guarantee an affordable procedural path to the vindication of every
claim.
19.
On March 27, 2013, the Supreme Court decided Comcast Corp. v. Behrend, reversing the
certification of a class action in an antitrust suit. The district court had certified the class, and the court of
appeals affirmed. The suit alleged that Comcast’s practice of “clustering” its cable systems, by which it
acquired additional systems adjacent to its existing systems in a metropolitan area, was an antitrust
violation. To pursue a case on a class basis, however, the district court must find that “the questions of law
or fact common to class members predominate over any questions affecting only individual members.’’ It
found that was true of only one of the four theories of anticompetitive effect asserted, that the clustering
deterred “overbuilding” by competing cable operators. The lower courts rejected Comcast’s argument that
the econometric study that plaintiffs had submitted to show damages was not capable of measuring
damages for the class injured under that theory, holding that such an argument went to the merits of the
case and was not suitable for decision at the class certification stage. The Supreme Court held that the
plaintiffs must show that damages can be measured on a classwide basis; their evidence here fell short, and
the court must consider that in certifying the class, even if the issue overlaps the merits.
20.
On February 19, 2013, in FTC v. Phoebe Putney Health System, Inc., the Supreme Court
unanimously ruled that the state action immunity doctrine did not immunize Phoebe Putney Health System,
Inc.’s acquisition of Palmyra Park Hospital, Inc. from the federal antitrust laws. The FTC filed suit on
April 20, 2011, seeking to block the proposed combination of the only two hospitals in Albany, Georgia.
The Commission alleged that the deal would reduce competition significantly and allow the combined
Phoebe/Palmyra to raise prices for general acute-care hospital services charged to the commercial health
plans harming patients and local employers and employees.
21.
Under the state action doctrine, when a local governmental entity acts pursuant to a clearly
articulated and affirmatively expressed state policy to displace competition, it is exempt from scrutiny
under the federal antitrust laws. The Supreme Court held that Georgia law, which creates special-purpose
public entities called hospital authorities and gives those entities general corporate powers, including the
power to acquire hospitals, did not clearly articulate and affirmatively express a state policy to permit
acquisitions that substantially lessen competition. The Court, unanimously upholding the FTC’s position
and reversing the lower court, reasoned that, because Georgia’s grant of general corporate powers to
hospital authorities does not include permission to use those powers anticompetitively, the cleararticulation test is not satisfied and state action immunity does not apply.
See
www.ftc.gov/opa/2013/02/phoebe.shtm.
3.2.2
U.S. Court of Appeals Cases
22.
On May 31, 2013, the U.S. Court of Appeals for the Fourth Circuit decided North Carolina State
Board of Dental Examiners v. FTC, 717 F.3d 359 (4th Cir. 2013), upholding the FTC’s administrative
adjudicatory order concluding that a state dental board had unlawfully attempted to restrict competition for
tooth whitening services by issuing cease-and-desist orders, without judicial authorization, against nondentist providers of those services. The Court ruled that the dental board was not exempt from antitrust
liability because it was composed almost entirely of industry representatives (dentists) and was not actively
supervised by the state government. The Court affirmed the FTC’s conclusions that the dentists had acted
collusively and that their actions were “inherently suspect” due to their clear tendency to suppress
competition. The Supreme Court recently granted the dental board’s request to review the Fourth Circuit’s
ruling.
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23.
On January 4, 2013, the U.S. Court of Appeals for the Tenth Circuit decided Auraria Student
Housing at the Regency, LLC v. Campus Village Apartments, LLC, 703 F.3d 1147, an interlocutory appeal
from a district court order denying a motion to dismiss in which the defendant had pleaded state action
immunity from an antitrust suit. The defendant contended that state action immunity was like the
sovereign immunity of a state, which is a right not to be sued by a private party without its consent. It
further argued that an erroneous order forcing a state to go to trial would defeat the purpose of the doctrine,
so an order denying a motion to dismiss should be immediately appealable under the collateral order
doctrine. However, the Court held that the state action “immunity” provides a private party with only a
defense on the merits that can be vindicated by an appeal from a final judgment after trial, so the court did
not have jurisdiction over the interlocutory appeal.
24.
On November 20, 2012, the U.S. Court of Appeals for the Federal Circuit decided Ritz Camera &
Image, LLC, v. SanDisk Corp., 700 F.3d 503. Ritz, a purchaser of NAND flash memory products, sued
SanDisk under the antitrust laws for monopolizing the market for NAND products, alleging that SanDisk
had secured a patent for the technology through deliberate fraud on the Patent Office. SanDisk moved to
dismiss the claim, arguing that Ritz was not a competitor, was not threatened with liability under the patent
laws, and thus had no standing to bring it. The district court denied SanDisk’s motion, but certified the
issue for interlocutory review. The court of appeals affirmed, holding that standing under the patent laws
was irrelevant; this was an antitrust suit, and so long as Ritz had standing as a direct purchaser under the
antitrust laws, it could raise the fraudulent patent acquisition as an element of its antitrust claim.
3.3
Statistics on Private and Government Cases Filed
25.
According to the 2013 Annual Report of the Director of the Administrative Office of the U.S.
Courts, 817 new civil antitrust actions, both government and private, were filed in the federal district courts
in
FY
2013.
See
Table
C-2A
of
the
report,
available
at
http://www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2013/appendices/C02ASep13.pdf.
3.4
Significant Enforcement Actions
3.4.1
DOJ Criminal Enforcement
26.
The Division obtained significant criminal fines and prison sentences in FY 2013, including the
longest sentence ever involving a Sherman Act violation, and won jury trial victories relating to its
Superfund (a federal program to clean up hazardous waste sites) fraud and real estate foreclosure auctions
investigations. The FY 2013 total of $1 billion in criminal fines total is the third time since 2009 that the
Division exceeded the $1 billion fine mark; since 2009, the Division has obtained more than $4 billion in
criminal fines. These criminal fines do not go to the Division, but rather are contributed to the Crime
Victims’ Fund, helping those victimized by federal crimes throughout the U.S. The Division also
established a second criminal office in Washington, D.C. Its initial focus will be investigating real estate
foreclosure auction bid rigging in the southeastern United States; over time it will expand to include a full
portfolio of matters.
27.
In FY 2013, in connection with its coastal shipping investigation, the Division obtained a fiveyear prison sentence for a convicted criminal defendant, the longest ever for a Sherman Act violation. And
in the Division’s investigation of kickbacks at Environmental Protection Agency Superfund sites, a
defendant was sentenced to 14 years in prison for antitrust violations, fraud, and other criminal activity.
During FY 2013, 68 percent of the individuals sentenced in Division cases received prison time. Nearly
twice as many defendants in Division cases receive prison sentences as in the 1990s, with current
defendants serving longer terms. In FY 2013, the average prison sentence was 25 months, more than three
times the average of eight months in the 1990s. Ten foreign nationals were sentenced to imprisonment
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DAF/COMP/AR(2014)24
during FY 2013, with an average sentence of 15 months. The Division remains committed to ensuring that
culpable foreign nationals serve prison sentences for violating the U.S. antitrust laws, just as U.S. pricefixers do.
28.
Real Estate Foreclosure Auctions Cartel. On March 11, 2014, following a four-week trial, a
California federal jury convicted two real estate investors of conspiring to rig bids at public real estate
foreclosure auctions in San Joaquin County, California. One of the defendants also was convicted of
obstruction of justice for destroying evidence. The jury could not reach a verdict on a count of conspiracy
to commit mail fraud against these two defendants. The jury found a third defendant, an auctioneer, not
guilty.
29.
The convicted investors and their co-conspirators agreed to suppress and restrain competition by
rigging bids to obtain selected properties offered at public auctions. Evidence showed that after the
conspirators’ designated bidder bought a property at a public auction, they often would hold a second,
private auction at which each participating conspirator would bid the amount above the public auction
price he or she was willing to pay. The conspirator who bid the highest amount at the end of the private
auction won the property. The difference between the price at the public auction and that at the second
auction was the group’s illicit profit, and it was divided among the conspirators in payoffs. This was
money that otherwise would have gone to pay off mortgages and, in some cases, the defaulting
homeowners. The bid-rigging conspiracy lasted from September 2008 or earlier until October 2009 or
later. To date, 46 individuals either have pled guilty or agreed to plead guilty in connection with the real
estate
foreclosure
auctions
investigation
in
northern
California.
See
http://www.justice.gov/atr/public/press_releases/2014/304304.htm.
30.
Superfund Kickback Scheme. On September 30, 2013, following a two-week trial, a jury in
New Jersey returned guilty verdicts on 10 counts charged in the indictment against a former project
manager for a prime contractor, for his central role in conspiracies that spanned seven years and involved
kickbacks in excess of $1.5 million at two Environmental Protection Agency Superfund sites. The
defendant was convicted of conspiring with three subcontractors at two New Jersey Superfund sites. He
also was convicted of engaging in an international money laundering scheme, major fraud against the
United States, accepting illegal kickbacks, committing two tax violations, and obstruction of justice. As
part of the conspiracies, he and co-conspirators accepted kickbacks from subcontractors in exchange for
the award of subcontracts. He also provided co-conspirators with their competitors’ bid prices, which
allowed them to submit higher bid prices and still be awarded the subcontracts. On March 3, 2014, the
defendant was sentenced to 14 years in prison and to pay a $50,000 fine. As of March 2014, more than $6
million in criminal fines and restitution have been imposed in the course of this investigation, and six
individuals have been sentenced to serve more than 24 years in total prison time. See
http://www.justice.gov/atr/public/press_releases/2014/304133.htm
and
http://www.justice.gov/atr/public/press_releases/2013/301155.htm.
31.
Auto Parts. The Division’s ongoing automobile parts investigation has yielded very significant
results. On September 26, 2013, the Division undertook the largest simultaneous enforcement action in its
history, bringing charges against nine companies, which agreed to the imposition of a total of more than
$740 million in fines, and two individuals. Recently, the investigation also yielded the fourth-largest
criminal antitrust fine ever imposed—a $425 million fine against Bridgestone Corporation.
32.
As of March 2014, the investigation has resulted in charges against 26 companies and 29
individuals and more than $2 billion in criminal fines for participation in conspiracies to fix prices of and
rig bids on automobile parts, including safety systems such as seat belts, air bags, steering wheels, and
antilock brake systems, and critical parts such as anti-vibration rubber, instrument panel clusters, starter
motors, and wire harnesses. Twenty-three of the individuals have pled guilty or agreed to plead guilty and
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DAF/COMP/AR(2014)24
have agreed to serve prison sentences ranging from a year and a day to two years. The Division continues
to cooperate on this investigation with its counterparts in Canada, the EC, Japan, and South Korea, among
others. See press releases and case filings at http://www.justice.gov/atr/public/division-update/2014/auto
parts.html#press-releases.
33.
Financial Fraud: Real Estate Foreclosure. As of March 2014, 90 defendants have pleaded
guilty to real estate foreclosure and tax liens conspiracies across the United States that suppress and
restrain competition in ways that harm financially distressed homeowners. The Division has partnered with
the FBI to combat a pattern of collusive schemes among real estate speculators aimed at eliminating
competition at real estate foreclosure auctions. Instead of competitively bidding at public auctions for
foreclosed properties, groups of real estate speculators work together to keep public auction prices
artificially low by paying each other to refrain from bidding or holding unofficial “knockoff” auctions
among themselves. The Division has taken recent action against real estate investors who purchased rigged
properties in four counties in California, as well as Mobile, Alabama, and Atlanta, Georgia. As described
above in paras 28-29, the Division recently secured convictions at trial against two real estate investors for
conspiring to rig bids at real estate foreclosure auctions in San Joaquin County, California. See real estate
foreclosure
auctions
investigation
press
releases
and
case
filings
at
http://www.justice.gov/atr/public/division-update/2014/re-foreclosure-auctions.html#press-releases.
34.
Financial Fraud: Tax Lien Auctions. Similar collusive conduct also has been detected among
bidders for public tax liens, and eleven individuals and three companies have pleaded guilty as part of an
ongoing investigation into bid rigging and fraud related to such auctions in New Jersey. Additionally, four
individuals and two entities were indicted on November 19, 2013. The Division is investigating this type of
anticompetitive conduct at auctions in multiple states. See municipal tax lien auctions investigation press
releases
and
case
filings
at
http://www.justice.gov/atr/public/division-update/2014/tax-lien
auctions.html#press-releases.
35.
Financial Fraud: LIBOR. In the LIBOR (London InterBank Offered Rate)/Euribor
investigation, the Division, in conjunction with the Criminal Division, obtained a conviction against
Rabobank, which agreed to pay $325 million in criminal penalties. The Division also filed criminal
complaints against, and obtained guilty pleas from, eight individuals for their roles in manipulating LIBOR
and/or Euribor benchmark interest rates. In all, the Division has obtained $475 million in criminal fines
and penalties in this ongoing investigation, and the total global criminal and regulatory fines, penalties, and
disgorgement obtained by enforcement authorities is over $3.7 billion. The broader investigation relating to
LIBOR and other benchmark rates has required, and has greatly benefited from, a wide-ranging
cooperative effort among various enforcement agencies both in the United States and abroad. The FBI,
Securities and Exchange Commission, Commodity Futures Trading Commission, U.K. Financial Conduct
Authority and Serious Fraud Office, Japanese Ministry of Justice, Japan Financial Services Agency, Swiss
Financial Market Supervisory Authority, Dutch Public Prosecution Service, and Dutch Central Bank all
have played major roles in the LIBOR investigation. See http://www.justice.gov/atr/public/division
update/2014/libor.html#press-releases.
36.
Financial Fraud: Municipal Bonds. The Division, in concert with other federal agencies,
continues to obtain convictions in criminal conspiracies involving bid rigging in the municipal bond
investments market. The schemes under investigation involve unlawful agreements to manipulate the
bidding process on municipal investment and related contracts—financial instruments that were used to
invest the proceeds of, or manage the risks associated with, bond issuances by municipalities and other
public entities. The bonds these crimes affect support critical municipal infrastructure, like roads, schools,
and other projects. As of March 2014, the Division’s ongoing investigation has resulted in criminal charges
against 20 former executives of various financial services companies and one corporation. Seventeen of the
20 executives charged have pleaded guilty or were convicted at trial. In addition, financial institutions have
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DAF/COMP/AR(2014)24
agreed to pay a combined total of nearly $750 million in restitution, penalties, and disgorgement to federal
and state agencies for their roles in the conduct. See http://www.justice.gov/atr/public/division
update/2014/muni-bonds.html#press-releases.
37.
Airline Charter Services. On February 24, 2014, the Division obtained the fifth guilty plea to
arise out of its ongoing investigation into fraud and anticompetitive conduct in the airline charter services
industry. A former employee of Aviation Fuel International, Inc. (AFI) pleaded guilty to a felony charge.
The charge against him stemmed from the investigation into kickback payments by AFI and its employees
to the former vice president of ground operations for Ryan International Airlines. The defendant worked
for AFI from June 2007 to March 2008, and during that time Ryan’s vice president received kickback
payments from AFI on aviation fuel, services, and equipment sold by AFI to Ryan. AFI’s owner and
operator pleaded guilty on March 6, 2014, bringing the total number of guilty pleas to six. Four of the six
individuals who have pleaded guilty have been ordered to serve sentences ranging from 16 to 87 months in
prison
and
to
pay
more
than
$580,000
in
restitution.
See
http://www.justice.gov/atr/public/press_releases/2013/300683.htm;
http://www.justice.gov/atr/public/press_releases/2013/300000.htm;
and
http://www.justice.gov/atr/public/press_releases/2013/299559.htm.
38.
Ocean Shipping. On February 27, 2014, the Division brought charges in its investigation of a
conspiracy involving ocean shipping services. Compañía Sud Americana de Vapores S.A. (CSAV), a
Chilean corporation, was the first company charged in the conspiracy to suppress and eliminate
competition by allocating customers and routes, rigging bids, and fixing prices for the sale of international
ocean shipping services for roll-on, roll-off cargo. This is non-containerized cargo that can be rolled onto
and off an ocean-going vessel and includes new and used cars and trucks, as well as construction, mining,
and agricultural equipment. CSAV has agreed to pay an $8.9 million criminal fine. See
http://www.justice.gov/atr/public/press_releases/2014/304053.htm.
3.4.2
DOJ Civil Non-Merger Enforcement
39.
E-Books. On July 10, 2013, after a three-week trial, Judge Denise Cote of the Southern District
of New York ruled that Apple had violated section 1 of the Sherman Act by conspiring to raise the prices
of e-books and curtail e-book sellers’ ability to compete on price. The court concluded that Apple had
engaged in and furthered a horizontal price-fixing conspiracy among e-book publishers. The court also
expressed concern with the credibility of several Apple witnesses who testified under oath. Ultimately, the
court determined that Apple’s illegal conduct deprived consumers of the benefits of competition on ebooks and forced them to pay higher prices. The Division filed its suit against Apple and five publishers
on April 11, 2012, and had previously reached settlements with the publishers.
40.
On September 5, 2013, the court entered its final judgment in this case. The court’s order
requires that Apple modify its existing agreements with the publisher defendants to allow retail price
competition on e-books and eliminate the “most-favored-nation” clauses that led to higher e-book prices.
The order also prohibits Apple from serving as an information conduit among e-book publishers and from
retaliating against publishers for refusing to sell e-books on agency terms. Further, the order bars Apple
from entering into agreements with e-book publishers that are likely to increase, fix, or set the price at
which other e-book retailers may sell content. Finally, the court ordered the appointment of an external
compliance monitor to ensure that Apple’s antitrust compliance polices will be sufficient to deter any
future anticompetitive conduct. The monitor will work with an internal antitrust compliance officer who
will be hired by and report exclusively to the outside directors on Apple’s audit committee. The antitrust
compliance officer will be responsible for training Apple’s senior executives about the antitrust laws and
ensuring
that
Apple
abides
by
the
final
judgment.
See
http://www.justice.gov/atr/public/press_releases/2013/299776.htm
and
10
DAF/COMP/AR(2014)24
http://www.justice.gov/atr/public/press_releases/2013/299273.htm. Apple’s appeal of the district court’s
decision is pending.
41.
American Express. The Division filed suit on October 4, 2010, challenging rules American
Express, MasterCard, and Visa instituted that prevented merchants from offering consumers discounts or
rewards for using competing card brands and from providing information about the costs associated with
the use of their credit cards. These policies caused consumers to pay more for their purchases and raised
merchant costs. The Division reached a settlement with MasterCard and Visa, which the court approved in
July 2011, in which both companies agreed to eliminate the anticompetitive provisions. Litigation against
American Express continues. Discovery is ongoing, and trial is scheduled to begin in July, 2014. See
http://www.justice.gov/atr/public/press_releases/2010/262867.htm.
42.
eBay. The Division’s legal challenge to eBay’s agreement not to recruit or hire employees from
Intuit Inc. is ongoing. Division staff has worked closely in this matter with the California Attorney
General’s office, which filed a similar lawsuit. The Division seeks to prevent eBay from upholding its
agreement with Intuit or entering into similarly anticompetitive agreements with other companies. These
types of agreements eliminate competition to hire affected employees, depriving them of access to
improved job and salary opportunities. This is the Division’s most recent challenge to a “no-poach”
agreement; earlier cases involving Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc.,
Lucasfilm Ltd., and Pixar resulted in consent decrees. The court entered a stay in this litigation on January
22,
2014,
to
accommodate
settlement
discussions.
See
http://www.justice.gov/atr/public/press_releases/2012/288865.htm.
43.
Chiropractic Associates, Ltd. of South Dakota. On April 8, 2013, the Division filed a civil
antitrust lawsuit against Chiropractic Associates Ltd. of South Dakota (CASD), alleging that CASD
negotiated contracts with insurers that caused consumers to pay higher fees for chiropractic services.
CASD includes approximately 80 percent of all practicing chiropractors in South Dakota and its
anticompetitive conduct dated to 1997. Along with this suit, the Division filed a proposed settlement,
which the court approved on September 4, 2013, prohibiting CASD from jointly determining prices and
negotiating contracts with insurers on behalf of competing chiropractors in South Dakota, North Dakota,
Minnesota, and Iowa, and requiring CASD to terminate its current payer contracts.
See
http://www.justice.gov/atr/public/press_releases/2013/295564.htm.
3.4.3
FTC Non-Merger Enforcement Actions
44.
In the Matter of Motorola Mobility LLC and Google, Inc. On July 24, 2013, the Commission
approved a final order requiring Google to license its standard essential patents (SEPs) on fair, reasonable,
and non-discriminatory (FRAND) terms. These SEPs are needed to make devices such as laptop and tablet
computers, smart phones, and gaming consoles. The Commission alleged that Google had reneged on
these commitments and pursued or threatened to pursue injunctions and exclusion orders against
companies that need to use SEPs held by Google’s subsidiary, Motorola Mobility LLC, in their devices
and were willing to license these patents on FRAND terms. Throughout the investigation, the FTC staff
worked closely with the European Commission.
See http://www.ftc.gov/enforcement/cases
proceedings/1210120/motorola-mobility-llc-google-inc-matter.
45.
Bosley, Inc., Aderans America Holdings, Inc., and Aderans Co., Ltd. On April 8, 2013, the
Commission brought charges alleging that Bosley, Inc., the nation’s largest manager of medical/surgical
hair restoration procedures, had illegally exchanged competitively sensitive, nonpublic information about
its business practices with one of its competitors, Hair Club. The information exchanged included details
about future product offerings, surgical hair transplantation price floors and discounts, plans for business
expansion and contraction, and current business operations and performance. On June 5, 2013, the
11
DAF/COMP/AR(2014)24
Commission approved a final settlement order in which Bosley agreed not to communicate such
information and to institute an antitrust compliance program. See http://www.ftc.gov/enforcement/cases
proceedings/1210184/bosley-inc-aderans-america-holdings-inc-aderans-co-ltd.
46.
In the Matter of Práxedes E. Alvarez Santiago, M.D., et al. On February 28, 2013, the
Commission challenged eight independent nephrologists in Puerto Rico alleging that they illegally
collectively bargained with insurers and refused to treat health plan patients when their price demands were
rebuffed. On May 3, 2013, the FTC approved a final order settling the charges and barring the doctors
from jointly negotiating prices, jointly refusing to deal with any insurer, and jointly refusing to treat
patients. See http://www.ftc.gov/enforcement/cases-proceedings/1210098/praxedes-e-alvarez-santiago
md-et-al-pr-nephrologists-matter.
47.
In the Matter of IDEXX Laboratories, Inc. On February 12, 2003, the Commission approved
a final order settling charges that IDEXX Laboratories, Inc. – the largest U.S. supplier of diagnostic testing
products used by small animal veterinarians – acted anticompetitively by engaging in exclusive dealing
arrangements with three national distributors and two large regional distributors, and threatening to drop
them if they carried other competing companies’ products. IDEXX agreed to an order that prohibits it
from entering into concurrent exclusive distribution arrangements with distributors of point-of-care
diagnostic testing products.
See http://www.ftc.gov/enforcement/cases-proceedings/101-0023/idexx
laboratories-inc-matter.
3.5
Advisory Letters from the FTC
48.
Under its Rules, the Commission or its staff may offer industry guidance in the form of advisory
opinions regarding proposed conduct in matters of significant public interest. These competition advisory
opinions inform the public about the Commission’s analysis in novel or important areas of antitrust law. In
FY 2013, FTC staff issued three advisory opinions, discussed below. For more information on the
Commission’s advisory letters, see http://www.ftc.gov/policy/advisory-opinions.
49.
The Money Services Round Table. On September 4, 2013, FTC staff issued an advisory
opinion concerning the Money Services Round Table’s (“TMSRT”) proposal to establish an information
exchange database and disseminate information to licensed U.S. money transmitters regarding terminated
U.S. agents. The TMSRT is a trade association comprised of licensed national money transmitters, which
are non-bank entities that transfer funds from one individual or institution to another by wire, check,
computer network, or other means. FTC staff opined that the TMSRT’s program appeared unlikely to
harm competition and that FTC staff had no intention of recommending an enforcement action challenging
the proposed information exchange. FTC staff noted that one of the safeguards of the proposed
information exchange was the appointment of a third-party vendor to maintain and secure the database. See
http://www.ftc.gov/sites/default/files/documents/advisory_opinions/money-services-round
table/130904moneyservicesopinion.pdf
50.
Norman Physician Hospital Organization. On February 13, 2013, FTC staff issued an
advisory opinion to the Norman Physician Hospital Organization (Norman PHO) regarding Norman
PHO’s proposed joint contracting activities. Norman PHO is a multi-provider network joint venture that
seeks to create a “clinically integrated” network and to engage in joint contracting with third party payers
on behalf of its participating physicians and hospitals. In the advisory opinion, FTC staff observed that
Norman PHO’s clinical integration program would increase the interdependence of and cooperation among
participating physicians and generate significant efficiencies in the provision of physician services.
Further, Norman PHO would not be an exclusive network. If a health plan, employer, or other third party
did not wish to contract with Norman PHO, it would, for example, have the ability to negotiate with the
network’s individual participating providers. FTC staff concluded that, as proposed, Norman PHO’s
12
DAF/COMP/AR(2014)24
activities were unlikely to unreasonably restrain trade and, therefore, FTC staff did not intend to
recommend
an
enforcement
action
against
Norman
PHO.
See
http://www.ftc.gov/sites/default/files/documents/advisory-opinions/norman-physician-hospital
organization/130213normanphoadvltr_0.pdf.
51.
The Methodist Hospital System. The FTC staff’s advisory opinion dated November 30, 2012,
addressed the proposal of The Methodist Hospital System (“Methodist”), a not-for profit hospital system,
to sell at cost drugs to Baytown EMS during the pendency of nationwide shortages of certain critical drugs.
Baytown EMS is a division of the Baytown, Texas, city government, and serves as the exclusive 9-1-1
emergency transport service for Baytown residents by city ordinance. As an emergency transport,
Baytown EMS also often administers certain pharmaceuticals en route to the hospital. The FTC staff
advised that Methodist’s proposal was a permissible emergency humanitarian gesture. Pursuant to the
Supreme Court’s precedent in Abbott Labs. v. Portland Retail Druggists Ass 'n, Inc. regarding a hospital’s
role in an emergency and the Commission’s similar discussion in its St. Peter’s Hospital of the City of
Albany advisory opinion, the staff opinion says Methodist may resell the needed pharmaceuticals to
Baytown
EMS
as
a
humanitarian
gesture
during
the
shortages.
See
http://www.ftc.gov/sites/default/files/documents/advisory_opinions/methodist-hospital
system/121130advopinionltrmethodist.pdf.
3.6
Business Reviews Conducted by the DOJ
52.
Under the Department’s business review procedure, a person may submit a proposed business
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 four business review letters in FY 2013. The
business
review
letters
can
be
found
at
http://www.justice.gov/atr/public/busreview/letters.html#page=page-1.
53.
On December 20, 2012, the Department announced it would not challenge a proposal by a group
of seven nuclear power plant operators to procure jointly certain goods and services; each of them operates
a single nuclear electric generation plant and they seek to obtain efficiencies similar to those of a nuclear
fleet operator through the proposed joint procurement. On January 2, 2013, the Department announced it
would not challenge a proposal by the two only providers of flight support services at an airport in Groton,
Connecticut, to combine their fuel and hangar resources in a newly formed joint venture. On January 16,
2013, the Department announced it would not challenge a proposal by a trade association of New York
hospitals to establish a “gainsharing” program, allowing physicians to receive a share of savings generated
from reducing costs for treating commercial health-insurance and managed-care patients; an independent
contractor would calculate a best practice norm for certain treatments and measure the performance of
individual physicians relative to the norm. On March 26, 2013, the Department declined to state its
enforcement intentions with respect to a proposed exchange for the trading of unit license rights to sets of
patents, because of inherent uncertainties and potential competitive concerns associated with the novel
business model.
4.
Enforcement of antitrust laws and policies; mergers and concentrations
4.1
Enforcement of Pre-merger Notification Rules
54.
On July 2, 2013, corporate investor Barry Diller was charged with violating pre-merger reporting
and waiting requirements when he acquired voting securities in The Coca Cola Company. Although this
was the first time that Diller was charged with an HSR Act violation, he had previously made a corrective
filing for what he claimed was an inadvertent failure to file before acquiring voting securities of a different
company. Under the terms of a consent decree filed simultaneously with the charges, Diller was required
13
DAF/COMP/AR(2014)24
to pay a $480,000 civil penalty. See http://www.ftc.gov/news-events/press-releases/2013/07/barry-diller
pay-480000-settle-ftc-allegations-related-premerger.
55.
On June 20, 2013, the investment firm of MacAndrews & Forbes Holdings, a New York-based
holding company owned by Ronald O. Perelman, was charged with violating pre-merger reporting and
waiting requirements when it acquired voting securities of Scientific Games Corporation, a provider of
lottery and gaming services. Although this was the first time that MacAndrews & Forbes was charged
with an HSR Act violation, the firm had previously made a corrective filing in May 2011 for what it
asserted was an inadvertent failure to file before acquiring voting securities of a different company. Under
the terms of the consent decree filed simultaneously with the charges, MacAndrews & Forbes was required
to pay a $720,000 civil penalty. See http://www.ftc.gov/news-events/press-releases/2013/06/investment
firm-macandrews-forbes-pay-720000-penalty-resolve-ftc.
4.2
Select Significant Merger Matters
4.2.1
FTC Public Merger Investigations and Challenges
56.
In the Matter of Actavis, Inc. and Warner Chilcott PLC. On September 27, 2013, the
Commission challenged international drug manufacturer Actavis, Inc.’s $8.5 billion acquisition of drug
manufacturer Warner Chilcott, alleging that the transaction would reduce competition in the U.S. markets
for four current and future drugs (Generic Femcon FE, Loestrin 24 FE, Lo Loestrin FE, and Atelvia). The
Commission’s consent order required Actavis to sell all rights and assets to the generic versions of the four
drugs to Amneal Pharmaceuticals L.L.C. Actavis would also relinquish its claim to first-filer marketing
exclusivity
for
the
generic
forms
of
Lo
Loestrin
FE
and
Atelvia.
See
http://www.ftc.gov/enforcement/cases-proceedings/131-0152/actavis-inc-warner-chilcott-plc-matter.
57.
In the Matter of Mylan Inc., Agila Specialties Global Pte. Limited, Agila Specialties Private
Limited, and Strides Arcolab Limited. On September 26, 2013, the Commission challenged Mylan Inc.’s
(“Mylan”) proposed acquisition of Agila Specialties Global Pte. Ltd and Agila Specialties Pvt. Ltd.
(collectively, “Agila”). The Commission alleged that in 11 markets, Mylan and Agila are two of a limited
number of current or likely future competitors as suppliers of generic pharmaceuticals. According to the
Commission, a decrease in suppliers in such markets through the acquisition would decrease competition
and likely lead to increased prices for injectable drugs. To address the competitive concerns, Mylan and
Agila agreed to divest 11 generic injectable drugs.
See http://www.ftc.gov/enforcement/cases
proceedings/131-0112/mylan-inc-agila-specialties-global-ptelimited-agila.
58.
In the Matter of Nielsen Holdings N.V., and Arbitron Inc. On September 20, 2013, the FTC
challenged Nielsen Holding N.V.’s (“Nielsen”) proposed $1.26 billion acquisition of Arbitron. The
Commission alleged that the acquisition would eliminate future competition between the two national
providers of cross-platform audience measurement services, and would likely cause advertisers,
advertisement agencies, and programmers to pay more for such services. The Commission’s consent
required Nielsen to sell and license, for a minimum of eight years, certain assets related to Arbitron’s
services to an FTC-approved buyer.
See http://www.ftc.gov/enforcement/cases-proceedings/131
0058/nielsen-holdings-nv-arbitron-inc-matter.
59.
In the Matter of Honeywell International Inc. On September 13, 2013, the Commission
challenged Honeywell International Inc.’s (“Honeywell”) acquisition of rival scan engine manufacturer
Intermec Inc. According to the FTC, the acquisition would reduce competition in the U.S. market for twodimensional (“2D”) bar code scan engines. 2D scan engines are used in products such as retail store
scanners to translate an image (often a barcode) into a digital format that can be interpreted and analyzed
by a computer. To resolve the charges, the Commission approved a consent order requiring Honeywell to
14
DAF/COMP/AR(2014)24
license its and Intermec’s patents for 2D scan engines to Datalogic IPTECH s.r.l. for the next 12 years. See
http://www.ftc.gov/enforcement/cases-proceedings/131-0070/honeywell-international-inc-matter.
60.
Solera Holdings, Inc. On July 22, 2013, the Commission challenged Solera Holdings, Inc.’s
(“Solera”) consummated 2012 acquisition of Actual Systems of America, Inc. (“Actual Systems”). The
Commission alleged that the acquisition harmed competition in the concentrated market for yard
management systems (“YMS”) used by automotive recycling yards, and would likely result in higher
prices for YMS and less innovation in the market. Solera, through its wholly owned subsidiary Hollander,
Inc., and Actual Systems were two of the three leading providers of YMS in the North American market at
the time of the acquisition. The FTC settlement required Solera to sell the U.S. and Canadian YMS
business that it acquired from Actual Systems to ASA Holdings, Inc.
See
http://www.ftc.gov/enforcement/cases-proceedings/121-0165/solera-holdings-inc.
61.
In the Matter of General Electric Company. On July 19, 2013, the Commission challenged
General Electric Company’s (“GE”) proposed $4.3 billion acquisition of Italy’s Avio S.p.A’s (“Avio”)
aviation business. Avio currently designs a critical component – the accessory gearbox or AGB – for Pratt
& Whitney’s PW1100G engine. Pratt & Whitney is a rival aircraft engine manufacturer to GE, and has no
viable alternatives to Avio for development of the AGB for the PW1100G engine. GE and Pratt &
Whitney are the only two firms that manufacture engines used on Airbus’s A320neo aircraft. The FTC
alleged that GE’s acquisition of Avio would put it in a position to interfere with the development of the
AGB, lessening competition in the sale of engines for the Airbus A320neo aircraft, and resulting in higher
prices, reduced quality, and engine delivery delays for A320neo customers. The consent order prohibits
GE from interfering with Avio staffing decisions relating to its work on the AGB for the PW1100G engine
and allows Pratt & Whitney to have representatives at the GE/Avio facility. If Pratt & Whitney terminates
its agreement with Avio post-merger, GE must provide transitional services to help Pratt & Whitney
manufacture AGBs and related parts for its PW1100G engine. The order also prevents GE from accessing
Pratt & Whitney’s proprietary information about the AGB. Finally, the proposed order allows the
Commission to appoint a monitor to oversee GE’s compliance with its obligations. Throughout the
investigation, FTC staff worked closely with the European Commission.
See
http://www.ftc.gov/enforcement/cases-proceedings/131-0069/general-electric-company-matter.
62.
In the Matter of Tesoro Corporation and Tesoro Logistics Operations LLC. On June 17,
2013, oil refiner Tesoro Corporation (“Tesoro”) and one of its subsidiaries agreed to settle FTC charges
that their $355 million acquisition of Chevron Corporation pipeline and terminal assets would be
anticompetitive. The consent order required Tesoro to sell the terminal it currently owns in Boise, Idaho,
to an FTC-approved buyer within six months. Without this divestiture, the deal would have given Tesoro
ownership of two of the three full service light petroleum terminals in Boise, significantly reducing
competition for local terminal services. The order also contains a separate order to maintain assets to
preserve Tesoro’s Boise terminal as a viable, competitive, and ongoing business.
See
http://www.ftc.gov/enforcement/cases-proceedings/131-0052/tesoro-corporation-tesoro-logistics
operations-llc-matter.
63.
Charlotte Pipe and Foundry Company, et al. On May 15, 2013, the Commission approved a
final order settling charges that Charlotte Pipe and Foundry Company’s consummated and non-reportable
2010 purchase of Star Pipe Products, Inc.’s cast iron soil pipe (CISP) business was anticompetitive. CISP
products are important components of pipeline systems used to transport wastewater from buildings to
municipal sewage systems, to vent plumbing systems, and to transport rainwater to storm drains. To help
restore competition in CISP markets in the United States, the proposed order prohibits Charlotte Pipe from
enforcing a confidentiality and non-compete agreement with Star Pipe, ensures that Charlotte Pipe publicly
discloses its prior acquisitions of other CISP importers, and requires Charlotte Pipe to notify the
15
DAF/COMP/AR(2014)24
Commission before making future acquisitions in this industry. See http://www.ftc.gov/enforcement/cases
proceedings/1110034/charlotte-pipe-foundry-company-et-al.
64.
In the Matter of Graco Inc. On April 18, 2013, the Commission challenged Graco, Inc.’s
consummated acquisition of Gusmer Corp. in 2005 and GlasCraft, Inc. (GCI) in 2008. The acquired
companies were Graco’s two closest competitors in the North American market for fast set equipment
(FSE) used by contractors to apply polyurethane foams and polyuria coatings. The consent order aims to
restore competition in the FSE market that was lost as a result of these acquisitions. It requires Graco to
license certain technology to Polyurethane Machinery Corp. (Gama/PMC) and contains provisions that
provide Gama/PMC and other competitors with easier access to distributors so they can distribute
competing FSE products in North America.
See http://www.ftc.gov/enforcement/cases
proceedings/1010215/graco-inc-matter.
65.
In the Matter of Robert Bosch GmbH. On November 26, 2012, the Commission challenged
Robert Bosch GmbH’s (“Bosch”) acquisition of SPX Service Solutions U.S. LLC (“SPX’) as
anticompetitive, alleging that the acquisition would have given Bosch a virtual monopoly in the market for
air conditioning recycling, recovery, and recharge devices for vehicles. Based on the consent order, Bosch
was required to sell its automotive air conditioner repair equipment business to automotive equipment
manufacturer, Mahle Clevite, Inc. Bosch also resolved allegations that, before its acquisition by Bosch,
SPX harmed competition in the market for air conditioning devices by reneging on a commitment to
license key, standard-essential patents (“SEPs”) on fair, reasonable and non-discriminatory (“FRAND”)
terms. Under the terms of the consent order, Bosch is required to grant manufacturers licenses to key
patents that they need to compete in the market for this equipment. Finally, Bosch will end agreements
that restrict third parties from advertising, servicing, distributing, or selling competitive products in the
United States. See http://www.ftc.gov/enforcement/cases-proceedings/1210081/bosch-robert-bosch-gmbh.
66.
In the Matter of Hertz Global Holdings, Inc. On November 15, 2012, the FTC required Hertz
Global Holdings, Inc. (“Hertz”) to sell its Advantage Rent A Car (“Advantage”) business, as well as the
rights to operate twenty-nine Dollar Thrifty Automotive Group, Inc. (“Dollar Thrifty”) in on-airport
locations around the country, under a proposed settlement that resolves charges that Hertz’s $2.3 billion
acquisition of Dollar Thrifty was anticompetitive. As part of the settlement, Hertz agreed to sell the entire
Advantage business as well as 16 Dollar Thrifty on-airport locations where Advantage does not yet operate
to Franchise Services of North America, Inc. (FSNA) and Macquarie Capital (USA) Inc. In addition,
Hertz agreed to sell another 13 Dollar Thrifty on-airport locations to FSNA/Macquarie or another FTCapproved buyer after the deal closes. In July 2013, the FTC approved a modified version of the settlement,
adjusting some of the dates by which Hertz must transfer certain airport rental locations to the acquirer,
addressing the possible resale of the divested assets by the acquirer, and requiring the divestiture of the
Dollar Thrifty location at Ronald Reagan Washington National Airport, rather than the Advantage desk as
originally contemplated. See http://www.ftc.gov/enforcement/cases-proceedings/101-0137/hertz-global
holdings-inc-matter.
67.
In the Matter of Corning Inc. On October 31, 2012, the Commission challenged Corning,
Inc.’s (‘Corning”) proposed acquisition of Becton, Dickinson and Company’s Discovery Labware
Division, alleging that the proposed acquisition would have been anticompetitive in the North American
markets for tissue culture treated (“TCT”) multi-well plates, dishes, and flasks used in cell culture
applications. Under the settlement, Corning will provide assets and assistance to enable life science
company Sigma-Aldrich Co., LLC to manufacture Corning’s line of these products in a manner
substantially similar to Corning’s process, replacing the competition lost through the acquisition. See
http://www.ftc.gov/enforcement/cases-proceedings/1210133/corning-incorporated.
16
DAF/COMP/AR(2014)24
68.
Watson Pharmaceuticals/Actavis Inc. On October 15, 2012, the Commission challenged
Watson Pharmaceuticals, Inc.’s (“Watson”) $5.9 billion proposed acquisitions of Actavis alleging that the
acquisition would have been anticompetitive in the markets of 21 current and future generic drugs used to
treat a wide range of conditions. The final order settling the Commission’s charges required Watson and
Actavis to sell the rights and assets to 18 drugs to Sandoz International GmbH and Par Pharmaceuticals,
Inc., and to relinquish the manufacturing and marketing rights to three other drugs to protect competition in
the
markets
for
these
generic
drugs.
See
http://www.ftc.gov/enforcement/cases
proceedings/1210132/watson-pharmaceuticals-actavis-inc.
69.
In the Matter of Magnesium Elektron North America, Inc. On October 12, 2012, the
Commission challenged magnesium plate producer Magnesium Elektron’s consummated acquisition of
rival plate manufacturer Revere Graphics Worldwide, Inc. According to the FTC, Magnesium Elektron’s
2007 acquisition of Revere Graphics Worldwide was anticompetitive and resulted in the combination of
the only two makers and sellers of magnesium plates for photoengraving in the world. In an effort to
restore competition in the market, the consent order required Magnesium Elektron to sell technology and
know-how used to manufacture magnesium plates for photoengraving to Universal Engraving, a company
uniquely positioned to become an effective competitor in this market because it already sold other metals
used in the photoengraving process to customers affected by the merger.
See
http://www.ftc.gov/enforcement/cases-proceedings/0910094/magnesium-elektron-north-america-inc.
70.
Universal Health Services. On October 5, 2012, the Commission challenged Universal Health
Services, Inc.’s (“UHS”) proposed acquisition of Ascend Health Corporation (Ascend). The Commission
alleged that the proposed transaction would lead to a virtual monopoly in the provision of acute inpatient
psychiatric services to commercially insured patients in the El Paso, Texas/Santa Teresa, New Mexico area
and would lead to reduced incentives to provide better service and patient care. To resolve the competitive
concerns, the settlement order required UHS to sell its Peak Behavioral Health Services facility to an FTCapproved buyer.
See http://www.ftc.gov/enforcement/cases-proceedings/1210157/universal-health
services-alan-b-miller.
4.2.
DOJ Public Merger Investigations and Challenges
71.
US Airways/American Airlines. On August 13, 2013, the Division, seven state attorneys
general, and the District of Columbia filed a civil antitrust suit to block the $11 billion merger between US
Airways Group Inc. (US Air) and AMR Corp., the parent company of American Airlines. The lawsuit
alleged that the bulk of domestic routes were already highly concentrated, and that the proposed
transaction not only would result in the world’s largest airline, but also would allow four airlines to control
more than 80 percent of domestic commercial air travel. The planned merger between US Air and
American would have eliminated direct competition between the two companies. These airlines were
head-to-head competitors for nonstop service on routes worth approximately $2 billion in annual routewide revenues, and competed directly on more than a thousand routes where one or both offered
connecting service.
72.
On November 12, 2013, the Division and the states reached a proposed settlement with US Air
and AMR Corp. The agreement requires the companies to divest slots and gates to low-cost carriers at key
constrained airports nationwide, including airports in Washington DC, New York, Boston, Chicago,
Dallas, Los Angeles, and Miami, in order to enhance system-wide competition. These divestitures include
138 slots at Reagan National and LaGuardia airports. This settlement will increase the presence of low cost
carriers at key airports, enhancing meaningful competition in the industry and benefiting air travelers. See
http://www.justice.gov/atr/public/press_releases/2013/301616.htm
and
http://www.justice.gov/atr/public/press_releases/2013/299960.htm. On April 25, 2014, the district court
17
DAF/COMP/AR(2014)24
approved
the
decree
and
entered
http://www.justice.gov/atr/cases/f305400/305489.pdf.
final
judgment.
See
73.
Anheuser-Busch InBev/Grupo Modelo. On January 31, 2013, the Division filed a civil suit to
block the proposed $20 billion acquisition by Anheuser-Busch InBev (ABI) of total ownership and control
of its rival Grupo Modelo (Modelo). The Division’s complaint alleged that the transaction would
substantially lessen competition in the market for beer in the U.S. as a whole and in 26 metropolitan areas
across the U.S., resulting in consumers paying more for beer and having fewer new products from which to
choose.
74.
On April 19, 2013, the Division entered into a proposed settlement with ABI and Modelo that
required the companies to divest Modelo’s entire U.S. business—including licenses to Modelo brand beers,
Modelo’s most advanced brewery in Mexico, Piedras Negras, its interest in Crown Imports LLC, and other
assets—to Constellation Brands Inc., in order to proceed with their merger. As part of the proposed
settlement, Constellation committed to expand the capacity of the Piedras Negras brewery in order to meet
current and future demand for the Modelo brands in the U.S. The court approved the settlement on October
24, 2013, ensuring that Constellation will fully replace Modelo as an independent competitor in the U.S.
See
http://www.justice.gov/atr/public/press_releases/2013/296018.htm
and
http://www.justice.gov/atr/public/press_releases/2013/292096.htm.
75.
Ecolab Inc./Permian Mud Service Inc. On April 8, 2013, the Division obtained a settlement
with Ecolab Inc. and Permian Mud requiring the companies to divest assets used by Permian’s subsidiary,
Champion Technologies, Inc., in order to proceed with their proposed merger. Ecolab’s subsidiary, Nalco
Company, and Champion were respectively the largest and second-largest providers of production
chemical management services for deepwater wells in the U.S. Gulf of Mexico. The transaction, as
initially proposed, threatened to eliminate significant competition between Nalco and Champion, leading to
higher prices, reduced service quality, and diminished innovation. The Division required the companies, in
a court-approved settlement, to divest to Clariant Corp. and its affiliate, Clariant International, certain
assets used by Champion to provide deepwater production chemical management services, as well as
exclusive licenses to all other production chemicals used by Champion in the Gulf, and the option to buy
certain additional assets and related equipment. The settlement also provided Clariant with a right to seek
to hire the merged firm’s relevant personnel, who possess key know-how and critical expertise in this field.
See http://www.justice.gov/atr/public/press_releases/2013/295543.htm.
76.
Gannett/Belo. On December 16, 2013, the Division filed suit to block Gannett’s proposed
acquisition of Belo, valued at approximately $2 billion, and Sander Media LLC’s related acquisition of six
Belo television stations that Gannett cannot hold under Federal Communications Commission (FCC) rules.
At the same time, the Division filed a proposed settlement to resolve the competitive concerns the suit
raised by requiring Belo and Sander to divest their interests in a CBS affiliate station in St. Louis. The
complaint alleged that the proposed transaction would have given Gannett a dominant position in broadcast
television spot advertising in the St. Louis designated market area, resulting in higher prices to advertisers.
The proposed settlement requires Gannett, Belo, and Sander to divest all assets used primarily in the
operation of the CBS affiliate to an independent buyer to be approved by the Division. See
http://www.justice.gov/atr/public/press_releases/2013/302344.htm.
77.
Cinemark Holdings Inc./Rave Holdings LLC. On May 20, 2013, the Division and the state of
Texas filed a civil suit to block the proposed acquisition by Cinemark of Rave Cinemas. The Division
simultaneously filed a proposed settlement, since approved by the court, requiring Cinemark to divest
movie theaters in three states before proceeding with the $220 million acquisition. Additionally, the
Division and the state of Texas required Cinemark’s chairman to divest Movie Tavern Inc., which operates
18
DAF/COMP/AR(2014)24
theaters that compete with Rave Cinemas in Forth Worth
http://www.justice.gov/atr/public/press_releases/2013/296995.htm.
and
Denton,
Texas.
See
78.
Delta Air Lines/Virgin Atlantic Airways. On June 20, 2013, the Division closed its
investigation of Delta Air Lines’ acquisition of an equity interest in Virgin Atlantic Airways. The closing
statement explained that, in December 2012, Delta and Virgin “reached an agreement to establish a joint
venture on flights between North America and the United Kingdom. At the same time, Delta entered an
agreement to acquire the 49 percent stake in Virgin Atlantic currently held by Singapore Airlines for $360
million. Virgin Group will retain the majority 51 percent stake.” It explained that “[a]fter a thorough
investigation of the competitive effects of the proposed equity investment and joint venture, the Antitrust
Division concluded that the facts and circumstances did not warrant further investigation or action.” The
statement also observed that the Division and the European Commission “cooperated closely throughout
the course of their respective investigations, with frequent contact between the agencies.” See
http://www.justice.gov/atr/public/press_releases/2013/298788.htm.
79.
Bazaarvoice, Inc. On January 10, 2013, the Division filed a lawsuit against Bazaarvoice, Inc.,
challenging the company’s June 2012 $168 million acquisition of PowerReviews, which the Division
alleged substantially lessened competition in the market for Internet product ratings and reviews platforms
in the U.S., resulting in higher prices and diminished innovation. Bazaarvoice was the dominant
commercial supplier of ratings and reviews platforms in the U.S., and, prior to the acquisition,
PowerReviews was its most significant rival. Retailers and manufacturers use product ratings and reviews
platforms to collect, organize, and display consumer-generated feedback online.
80.
The Bazaarvoice/PowerReviews transaction was not reportable under the Hart-Scott-Rodino Act
and the parties completed the transaction without review by the antitrust agencies. Division staff
discovered the problematic acquisition when reviewing the trade press. In January 2014, the Division won
a trial victory in its challenge to the acquisition. The evidence showed that PowerReviews was a
significant threat to Bazaarvoice, that other rivals were poorly positioned to fill the competitive void
created by the merger, and that Bazaarvoice’s executives intended to eliminate competition through the
acquisition.
81.
On April 24, 2014, the Division announced that Bazaarvoice had agreed to divest the assets it
acquired from PowerReviews and adhere to additional measures to ensure that a divestiture buyer could
quickly restore the competition that existed prior to the unlawful acquisition. To compensate for the
deterioration of PowerReviews’ competitive position, Bazaarvoice agreed to provide syndication services
to the divestiture buyer for four years, allowing the buyer to build its customer base and develop its own
syndication network. Bazaarvoice agreed to allow its customers to switch to the divestiture buyer without
penalty. Bazaarvoice will also waive trade-secret restrictions for any of its employees hired by the
divestiture buyer, enabling the buyer to leverage Bazaarvoice’s post-merger research and development
efforts. Additionally, the agreement provides for a trustee to oversee the divestiture process and to monitor
Bazaarvoice’s compliance with its other obligations under the remedy, which is awaiting final approval by
the court. See http://www.justice.gov/atr/public/press_releases/2014/305389.htm.
5.
International antitrust cooperation and outreach
5.1
International Antitrust Cooperation Developments
82.
On September 25, 2013, the Antitrust Agencies issued a joint model waiver of confidentiality for
individuals and companies to use in merger and civil non-merger matters involving concurrent review by
the FTC or DOJ and non-U.S. competition authorities. The model waiver is designed to streamline the
waiver process to reduce the burden on individuals and companies, as well as to reduce the Agencies’ time
19
DAF/COMP/AR(2014)24
and resources involved in negotiating waivers. The model waiver updates and replaces the Agencies’ prior
waiver forms. It reflects both Agencies’ recent experience with waivers, incorporating updated language
and provisions, including a provision addressing the Agencies’ treatment of privileged information. The
model waiver is available at http://www.justice.gov/atr/public/international/docs/300917.pdf and
http://www.ftc.gov/sites/default/files/attachments/international-waivers-confidentiality-ftc-antitrust
investigations/model_waiver.pdf.
83.
The Antitrust Agencies continued to play a lead role in promoting cooperation and convergence
toward sound competition policies internationally, through building strong bilateral ties with major
enforcement partners and participation in multilateral bodies such as the Competition Committee of the
Organization for Economic Cooperation and Development (“OECD”), International Competition Network
(“ICN”), the United Nations Conference on Trade and Development (“UNCTAD”), and the Asia-Pacific
Economic Cooperation (“APEC”).
84.
In January 2014, the Agencies participated in a bilateral consultation in Beijing with China’s
three antimonopoly agencies—the People’s Republic of China National Development and Reform
Commission (“NDRC”), Ministry of Commerce (“MOFCOM”), and State Administration for Industry and
Commerce (“SAIC”). This was the second annual high-level Joint Dialogue held pursuant to the
Memorandum of Understanding (“MOU”) on Antitrust Cooperation among the U.S. and Chinese agencies.
The officials discussed ways to promote competition in a global economy and various aspects of antitrust
enforcement.
85.
In November 2013, the Agencies participated in the first official bilateral consultation with the
Indian Ministry of Corporate Affairs and the Competition Commission of India since the signing of the
bilateral MOU in September 2012. In October 2013, the Agencies held annual bilateral antitrust
consultations with the European Commission in Brussels. In September 2013, the Agencies participated in
a bilateral meeting with the Japan Fair Trade Commission in Washington, D.C.
86.
During FY 2013, the Agencies cooperated on merger reviews – often under waivers from parties
and third parties – with many competition agencies around the world, including those of Australia, Brazil,
Canada, China, the European Union, Germany, Japan, Mexico, and the United Kingdom.
87.
The FTC cooperated with foreign counterparts on 14 merger matters and three conduct
investigations. For example, the FTC engaged in substantive cooperation with nine non-U.S. antitrust
agencies, including newer authorities, reviewing Thermo Fisher’s proposed acquisition of Life
Technologies in an effort to reach consistent results. The cooperating agencies include those in Australia,
Austria, Brazil, Canada, China, the European Union, India, Japan, Korea and Lithuania. The extent of
cooperation with each agency varied, generally depending on the nature of the likely competitive effects in
the jurisdictions, and ranged from discussions of timing and relevant market definition and theories of
harm to coordination of compatible remedies. As a result of the cooperation efforts, the FTC and the
European Commission were able to approve GE Healthcare as the divestiture buyer in this matter on the
same day. See http://www.ftc.gov/news-events/press-releases/2014/01/ftc-puts-conditions-thermo-fisher
scientific-incs-proposed. Commission staff cooperation with non-U.S. counterparts also included
extensive coordination on a number of non-public matters in which the Commission ultimately closed its
investigation without taking enforcement action or that resulted in abandonment of the transaction by the
parties, some after second requests were issued.
88.
In FY 2013, the Division cooperated with non-U.S. antitrust agencies on many civil non-merger,
merger, and cartel investigations. An example is the Division’s investigation into Samsung Electronics Co.
Ltd’s alleged anticompetitive use of its portfolio of standards-essential patents (“SEPs”)—which Samsung
had committed to license to industry participants on fair, reasonable, and nondiscriminatory (“FRAND”)
20
DAF/COMP/AR(2014)24
terms. The Division’s investigation focused on Samsung’s alleged attempts to harm competition by using
its F/RAND-encumbered SEPs to obtain exclusion orders from the U.S. International Trade Commission
(“ITC”) against certain iPhone and iPad models. An exclusion order the ITC issued against Apple to
remedy infringement of a Samsung patent was disapproved by the U.S. Trade Representative (“USTR”) on
policy grounds due to its impact on competitive conditions in the U.S. economy and on U.S. consumers. In
light of USTR’s action, the Division announced on February 7, 2014, that it was closing its investigation
into Samsung’s conduct, but would continue to monitor developments in this area.
See
http://www.justice.gov/atr/public/press_releases/2014/303547.htm.
89.
The European Commission similarly investigated whether Samsung’s seeking of injunctions
against Apple in various member states on the basis of its wireless cellular F/RAND-encumbered SEPs
amounts to an abuse of a dominant position prohibited by EU antitrust rules. The Division worked closely
and consulted frequently with its colleagues in the European Commission throughout this investigation,
and noted in its closing statement that “this cooperation underscores the agencies’ common concerns over
the potential harm to competition that can result from the anticompetitive use of SEPs.” The Division also
coordinated and cooperated with competition agencies in other jurisdictions in many ongoing international
cartel investigations; the Division worked closely, for example, with the Japanese Fair Trade Commission
in the auto parts investigations and prosecutions.
90.
In FY 2013, the Agencies continued to play leadership roles in the ICN and to serve as ICN
Steering Group members. At ICN’s annual conference in Warsaw on April 24-26, 2013, the ICN advanced
progress on convergence through important initiatives on international enforcement cooperation and
investigative processes in competition cases. The ICN adopted new work product on economic analysis in
merger review, legal theories in exclusive dealing investigations, and international cooperation and
information sharing in cartel enforcement. See http://www.internationalcompetitionnetwork.org/.
91.
During FY 2013, the FTC served as co-chair of the ICN’s Agency Effectiveness Working Group
(“AEWG”), together with the Mexican Federal Competition Commission and the Norwegian Competition
Authority. The FTC co-led the Investigative Process Project with the European Commission, which
produced reports on investigative tools and agency transparency practices.
See
http://internationalcompetitionnetwork.org/uploads/library/doc901.pdf.
The FTC also heads the
Curriculum Project, which produced new modules on planning and conducting investigations, competition
advocacy,
and
challenges
for
agencies
in
developing
countries.
See
http://www.internationalcompetitionnetwork.org/about/steering-group/outreach/icncurriculum.aspx.
92.
During FY 2013, the Division served as co-chair of the ICN Cartel Working Group, together with
Germany’s Bundeskartellamt and the Japan Fair Trade Commission. The group prepared a new chapter on
international cooperation and information sharing for its Anti-Cartel Enforcement Manual, a reference tool
for
antitrust
agencies
on
effective
investigative
techniques.
See
http://www.internationalcompetitionnetwork.org/working-groups/current/cartel.aspx.
5.2
Outreach
93.
In FY 2013, the Agencies continued to provide technical cooperation on competition law and
policy matters to their international counterparts. The FTC’s international technical assistance antitrust
program conducted 38 missions in 19 countries, including Armenia, China, Colombia, the Dominican
Republic, Egypt, Gambia, Hungary, Myanmar, Pakistan, Peru, Philippines, Russia, Serbia, South Africa,
Turkey, and Vietnam. The FTC also conducted judicial training in the Dominican Republic and Mexico.
The Agencies also are working with the Competition Commission of India (“CCI”) as it implements the
2002 Competition Act and new merger regime. Since FY 2010, the FTC has conducted 12 capacitybuilding workshops for the CCI. Training in FY 2013 also included the FTC’s sending of a resident
21
DAF/COMP/AR(2014)24
advisor to the CCI. The Division participated in conferences and workshops with many other antitrust
agencies, including those in Brazil, India, Korea, and South Africa, and participated in technical
cooperation programs with a wide range of countries around the world, including Chile, China, Croatia, the
Dominican Republic, Korea, Japan, the Philippines, Romania, South Africa, Turkey, and Vietnam.
94.
As part of its ongoing effort to build effective relationships, the FTC provides opportunities for
staff from foreign agencies to spend several months working directly with FTC staff on investigations
through its International Fellows and Interns program. In FY 2013, the FTC hosted eight international
fellows from countries including Argentina, India, Korea, Lithuania, Mauritius, and Mexico. These
assignments provide valuable opportunities for participants to obtain a deeper understanding of their
international partners’ laws and challenges. This knowledge provides critical support for coordinated
enforcement and promotes cooperation and convergence towards sound policy.
95.
In FY 2013, the Agencies continued their work with the World Intellectual Property Organization
(“WIPO”) on its ongoing project to study relationships between intellectual property and competition
policy. The Agencies and the U.S. Patent and Trademark Office completed a WIPO survey explaining
how the competitive effects of joint R&D agreements are analyzed under U.S. law.
6.
Regulatory and Trade Policy Matters
6.1
Regulatory Policies
96.
U.S. Patent and Trademark Office: On February 1, 2013, the Agencies filed comments with
the U.S. Patent and Trademark Office (“PTO”) concerning changes to PTO rules to (1) collect information
about patent ownership (including the real party in interest during patent prosecution and post-issuance)
and (2) make such information publicly available. The comments supported efforts to make public
information regarding patent ownership as accurate and complete as possible, as availability of such
information enables the patent marketplace to function more efficiently. The Agencies noted that the
proposed changes could stimulate innovation, enhance competition, and increase consumer welfare. See
http://www.justice.gov/atr/public/comments/292147.pdf.
97.
Intellectual Property Rights. The relationship between IP rights and competition law is a
central focus for the Antitrust Agencies. The Agencies engage with federal agencies, industry
representatives, and other groups on key issues like standards-setting activities and patent assertion entities.
For several years, the Agencies have worked with standards-setting organizations to help them develop IP
licensing policies that minimize the potential for anticompetitive abuse of patents incorporated in
standards. See, e.g., Edith Ramirez, Chairwoman, Federal Trade Commission, Competition Law & Patent
Assertion Entities (June 20, 2013), available at http://www.ftc.gov/public-statements/2013/06/competition
law-patent-assertion-entities-what-antitrust-enforcers-can-do, and Renata Hesse, Deputy Assistant
Attorney General, Antitrust Division, U.S. Department of Justice, The Art of Persuasion: Competition
Advocacy at the Intersection of Antitrust and Intellectual Property 4–6 (November 8, 2013), available at
http://www.justice.gov/atr/public/speeches/301596.pdf.
6.1.1
DOJ Activities: Federal and State Regulatory Matters
98.
Intellectual Property Rights. As part of its efforts in the area, the Division also assists policy
makers and judicial bodies in addressing important IP-antitrust issues. In January 2013, the Department
and the U.S. Patent and Trademark Office (“PTO”) released a joint Policy Statement on Remedies for
Standards-Essential Patents Subject to Voluntary F/RAND Commitments, available at
http://www.justice.gov/atr/public/guidelines/290994.pdf. This statement addressed how federal district
courts and the U.S. International Trade Commission (“ITC”) resolve cases involving standards-essential
22
DAF/COMP/AR(2014)24
patents which owners have committed to licensing on fair, reasonable, and nondiscriminatory (F/RAND)
terms. As noted above in para. 91, in August 2013, the U.S. Trade Representative relied on the policy
statement in disapproving an ITC exclusion order barring the importation of certain Apple Inc. products
into the United States. The Trade Representative echoed concerns in the policy statement about the
potential harms from owners of F/RAND-encumbered, standards-essential patents gaining undue leverage
and engaging in hold-up.
99.
Telecommunications Markets. The Division also advocates actively for competition in the
telecommunications sector. On April 11, 2013, the Division filed comments in a Federal Communications
Commission (“FCC”) proceeding regarding mobile spectrum holdings. The comments urged that rules for
spectrum auctions ensure that smaller nationwide networks have the opportunity to acquire low-frequency
spectrum and thereby improve the competitive dynamics among nationwide carriers and benefit
consumers. See http://www.justice.gov/atr/public/comments/295780.pdf. Similarly, on February 20, 2014,
the Division filed comments concerning the FCC’s review of its media ownership rules, especially its
attribution rules, which define the financial and other interests that are deemed comparable to ownership
and can trigger the FCC’s broadcast ownership limits. The comments discussed a variety of “sharing”
agreements, including joint sales agreements (JSAs), shared services agreements, and local news service
agreements, explaining that such arrangements can confer influence or control of one broadcast competitor
over another and that a failure to account for the effects of these arrangements can create opportunities to
circumvent FCC ownership limits. The Division argued that attribution is appropriate for JSAs and similar
agreements and that, even where a sharing agreement does not create an attributable interest under the
FCC’s bright-line rules, the FCC should scrutinize agreements on a case-by-case basis. See
http://www.justice.gov/atr/public/comments/303880.pdf.
100.
Federal Energy Regulatory Commission. On February 1, 2013, the Division filed comments
with the Federal Energy Regulatory Commission (FERC) on the agency’s possible changes to natural gas
market transparency provisions and public dissemination of detailed transaction-specific information. The
Division recommended careful consideration the characteristics of and existing degree of transparency in
natural gas markets to avoid unnecessarily increasing the risk of coordination among suppliers, and
suggested certain practical safeguards (e.g., aggregation, masking, and lagging) to eliminate or reduce this
risk. See http://www.justice.gov/atr/public/comments/292131.htm.
6.1.2
FTC Staff Activities: Federal and State Regulatory Matters
101.
Utilities, Electricity. On July 11, 2013, at the request of the Arizona Corporation Commission,
FTC staff submitted comments on retail electric competition in Arizona. Staff identified that significant
technical developments, including advanced “smart” meters, have made retail electric competition a path to
gaining substantial power system efficiencies and facilitating customized electric services that benefit
consumers. The FTC staff explained that such power system efficiencies can be achieved by moving away
from flat retail electricity rates and toward individually tailored electricity services, which can yield rate
savings, environmental improvements, innovative services not previously available, and enhanced service
reliability. See http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment
arizona-corporation-commission-concerning-retail-electric-competition-docket-no.e00000w-13
0135/130716arizonacorpcomment.pdf.
102.
Transportation, Taxi Services. On June 7, 2013, FTC staff provided comments to the District
of Columbia Taxicab Commission (“DCTC”) on proposed rulemakings regarding D.C. Municipal
Regulations concerning taxicabs and public vehicles for hire. These proposed rules follow the recent
enactment of two laws intended to modernize Washington, D.C.’s regulatory framework for passenger
motor vehicle transportation services. FTC staff explained that such legislation appears to facilitate new
and beneficial forms of competition for these services, including by giving legal recognition to new
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DAF/COMP/AR(2014)24
smartphone software applications used to arrange and pay for such services. However, staff expressed
concern that some rules proposed by the DCTC, such as restricting how software applications can affiliate
with taxicab operators, may unnecessarily impede competition, and recommended that regulations should
be no broader than necessary to address legitimate public safety and consumer protection concerns.
Finally, while the comments noted that requiring advance disclosures of certain information in a receipt
may be an efficient way to promote pricing transparency, FTC staff also stressed that such requirements
should be reasonably tailored to avoid unnecessarily inhibiting the entry and operation of applications. See
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comments-district
columbia-taxicab-commission-concerning-proposed-rulemakings-passenger/130612dctaxicab.pdf.
103.
Health Care. On June 4, 2013, FTC staff responded to the Connecticut General Assembly Labor
and Employees Committee’s request for comment on the potential competitive impact of Connecticut
House Bill 6431. The Bill provides for the formation of “health care collaboratives,” comprising otherwise
independent health care practitioners, and authorizing them to jointly negotiate prices and other terms with
health plans. The Bill also attempts to immunize these joint negotiations from scrutiny under the antitrust
laws. FTC staff recognized that efficient health care collaborations that benefit health care consumers can
be entirely consistent with the antitrust laws. However, FTC staff expressed concern that the purpose of
the Bill appeared to be to permit physicians to extract higher reimbursement rates from health plans
through joint negotiations, not to integrate their practices to reduce costs or better coordinate care for their
patients. FTC staff stated that the joint negotiations were likely to increase health care costs and decrease
access to health care services for Connecticut consumers, and would not pass muster under the antitrust
laws. Moreover, FTC staff noted that the attempt to confer antitrust immunity on these collaborations
likely would encourage groups of private health care providers to engage in blatantly anticompetitive
conduct. See http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment
connecticut-general-assembly-labor-and-employees-committee-regarding
connecticut/130605conncoopcomment.pdf.
104.
Health Care. On March 19, 2013, FTC staff, in response to a request from Connecticut State
Representative Theresa W. Conroy, provided comments on the likely competitive impact of Connecticut
House Bill 6391. The Bill seeks to eliminate the requirement that Advanced Practice Registered Nurses
(“APRNs”) have collaborative practice agreements with physicians in order to practice independently.
FTC staff explained that the proposed Bill could benefit Connecticut health care consumers by expanding
choices for patients, containing costs, and improving access to primary health care services. While FTC
staff recognized that collaboration between APRNs and other healthcare providers may be beneficial to
patients, it stated that, absent a finding of countervailing safety concerns regarding APRN practice, such
collaboration should not necessarily require direct supervision of one licensed health care provider by
another. The Bill thus seemed to be a pro-competitive improvement to the law that would benefit
Connecticut
health
care
consumers.
See
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-letter-honorable-theresa
w.conroy-connecticut-house-representatives-concerning-likely-competitive-impact-connecticut-house
bill/130319aprnconroy.pdf.
105.
Transportation, Taxi Services. On March 6, 2013, at the request of the Colorado Public
Utilities Commission (“CPUC”), FTC staff submitted comments on proposed changes to the Code of
Colorado Regulations. FTC staff expressed concern that the proposed regulatory changes may hurt
competition in the marketplace for passenger vehicle transportation services by inhibiting the use of mobile
smartphone software applications that allow consumers to arrange and pay for transportation services in
new ways. For example, one proposed rule change would create a barrier to the entry and operation of
independent smartphone applications that match customers with transportation services. FTC staff
recommended that a motor vehicle regulatory framework should be flexible and adaptable in response to
new and innovative methods of competition, such as smartphone applications for arranging transportation,
24
DAF/COMP/AR(2014)24
while still maintaining appropriate consumer protections. The comments further recommended that CPUC
be guided by the principle that any restriction on competition designed to address potential harm should be
narrowly
crafted
to
minimize
its
anticompetitive
impact.
See
http://www.ftc.gov/sites/default/files/documents/advocacy_documents/ftc-staff-comment-colorado-public
utilities-commission-concerning-proposed-rulemaking-passenger/130703coloradopublicutilities.pdf.
6.1.3
DOJ and FTC Trade Policy Activities
106.
The Agencies 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. In addition, the
Division works with other Department components (including the Civil, Criminal, and Environmental and
Natural Resources Divisions) on international trade and investment issues that affect those components or
the Department as a whole. The FTC coordinates on consumer protection aspects of trade policy with a
number of U.S. government agencies.
107.
The Agencies also participate in negotiations and working groups related to regional and bilateral
trade agreements. The FTC and the Division participate in competition policy discussions associated with
the Trans-Pacific Partnership (“TPP”) and the Transatlantic Trade and Investment Partnership (“TTIP”)
negotiations.
7.
New Studies Related to Antitrust Policy
7.1
Joint Conferences and Reports
108.
Patent Assertion Entity Activities Workshop. On December 10, 2012, the Agencies jointly
hosted a workshop in Washington D.C. to explore the impact of patent assertion entity (“PAE”) activities
on innovation and competition and the implications for antitrust enforcement and policy. The workshop
examined, among other topics, the legal treatment of PAE activity, economic theories concerning PAE
activity, and industry experiences.
Additional information on the workshop is available at
http://www.ftc.gov/news-events/events-calendar/2012/12/patent-assertion-entity-activities-workshop.
7.2
FTC Conferences, Reports, and Economic Working Papers
7.2.1
Conferences and Workshops
109.
Microeconomics Conference. On November 15-16, 2012, the FTC held its Fifth Annual
Microeconomics Conference bringing together researchers from academia and other government agencies
and organizations to discuss antitrust, consumer protection, and policy issues that the economists in the
FTC’s Bureau of Economics encounter in their work. The conference also provided an opportunity for
scholars outside the FTC to gain a better understanding of the work of the FTC and the economic analysis
conducted within the FTC’s Bureau of Economics. The topics addressed at the Conference included health
care competition, innovation, mergers, monopolization, collusion, and intellectual property. For more
information on the conference, see http://www.ftc.gov/news-events/events-calendar/2012/11/fifth-annual
microeconomics-conference.
110.
Pet Medications. On October 2, 2012, the FTC hosted a workshop to examine competition and
consumer protection issues in the pet medications industry. The workshop considered: (a) how current
industry distribution and other business practices affect consumer choice and price competition for pet
medications; (b) the ability of consumers to obtain written, portable prescriptions that they can fill
wherever they choose; and (c) the ability of consumers to verify the safety and efficacy of pet medications
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DAF/COMP/AR(2014)24
that they purchase. The workshop also examined the extent to which recent changes to restricted
distribution and prescription portability practices in the contact lens industry might yield lessons applicable
to the pet medications industry.
Additional information on the workshop is available at
www.ftc.gov/opp/workshops/petmeds/index.shtml.
7.2.2
Bureau of Economics Working Papers
111.
The FTC’s Bureau of Economic issued the following working papers during FY 2013. The
papers are available at http://www.ftc.gov/policy/reports/policy-reports/economics-research/working
papers.
•
•
•
•
•
•
•
Nicholas Kreisle, Merger Policy at the Margin: Western Refining’s Acquisition of Giant
Industries, September 2013
Nathan E. Wilson, Thomas G. Koch, Decomposing the American Obesity Epidemic, May
2013
Luke M. Olson, Brett W. Wendling, Estimating the Effect of Entry on Generic Drug Prices
Using Hatch-Waxman Exclusivity, April 2013
Daniel P. O’Brien, All-units Discounts and Double Moral Hazard, March 2013
Matthew T. Jones, “Nobody goes there anymore - it's too crowded:” Level-k Thinking in the
Restaurant Game, February 2013
Nathan E. Wilson, For-Profit Status & Industry Evolution in Health Care Markets: Evidence
from the Dialysis Industry, February 2013
Daniel Hosken, Luke M. Olson, Loren K. Smith, Do Retail Mergers Affect Competition?
Evidence from Grocery Retailing, December 2012
7.3
DOJ Economic Working Papers
7.3.1
DOJ Economic Analysis Group Discussion Papers
112.
The DOJ Economic Analysis Group issued the following papers during FY 2013. The papers are
available at www.usdoj.gov/atr/public/eag/discussion_papers.htm.
•
•
•
•
•
Nathan H. Miller, Forward Contracting and the Welfare Effects of Mergers, EAG 13-1, May
2013
Marc Remer, An Empirical Investigation of the Determinants of Asymmetric Pricing, EAG
12-10, November 2012
Nathan H. Miller, Marc Remer and Gloria Sheu, Using Cost Pass-Through to Calibrate
Demand, EAG 12-9, October 2012
Nathan H. Miller, Conor Ryan, Marc Remer and Gloria Sheu, Approximating the Price
Effects of Mergers: Numerical Evidence and an Empirical Application, EAG 12-8, October
2012
Gloria Sheu and Charles Taragin, Calibrating the AIDS and Multinomial Logit Models with
Observed Product Margins, EAG 12-7, October 2012
26
DAF/COMP/AR(2014)24
APPENDICES
Department of Justice: Fiscal Year 2013 FTE2 and Resources by Enforcement Activity
FTE
Amount ($ in thousands)
Criminal Enforcement
262
$62,686
Civil Enforcement
392
$93,880
Total
654
$156,466
Federal Trade Commission: Fiscal Year 2013 Competition Mission
FTE and Dollars by Program, Bureau & Office
FTE
Amount ($ in thousands)
Total Promoting
Competition
Mission
Bureau of Competition
278.8
46,706.4
Bureau of Economics
72.3
12,174.8
Regional Offices
21.1
5,183.6
Mission Support
132.7
49,359.9
2
Premerger Notification
Bureau of Competition
Bureau of Economics
Regional Offices
24.3
--0.3
3,820.0
--44.5
Merger & Joint Venture
Enforcement
Bureau of Competition
Bureau of Economics
Regional Offices
138.8
44.6
9.8
23,744.4
7,427.0
2,671.0
Merger & Joint Venture
Compliance
Bureau of Competition
Bureau of Economics
Regional Offices
3.1
0.1
---
487.3
16.6
0.8
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).
27
DAF/COMP/AR(2014)24
Nonmerger Enforcement
Bureau of Competition
Bureau of Economics
Regional Offices
95.6
14.8
8.1
15,126.6
2,579.9
1,868.9
Nonmerger Compliance
Bureau of Competition
Bureau of Economics
Regional Offices
--
--
--
--
--
--
Amount ($ in thousands)
FTE
Antitrust Policy Analysis
Bureau of Competition
Bureau of Economics
Regional Offices
--6.8
--
--1,131.9
--
Other Direct
Bureau of Competition
Bureau of Economics
Regional Offices
17.0
6.0
2.9
3,528.1
1,019.4
598.4
Support 132.7 49,359.9
28
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.