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DAF/COMP/AR(2013)10
Organisation de Coopération et de Développement Économiques
Organisation for Economic Co-operation and Development
17-Jun-2013
___________________________________________________________________________________________
English - Or. English
Directorate for Financial and Enterprise Affairs
COMPETITION COMMITTEE
DAF/COMP/AR(2013)10
Unclassified
ANNUAL REPORT ON COMPETITION POLICY DEVELOPMENTS IN THE UNITED STATES
-- 2012 -
This report is submitted by the United States to the Competition Committee FOR DISCUSSION at its forthcoming
meeting to be held on 19-20 June 2013.
English - Or. English
JT03341948
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(2013)10
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
3.2
Antitrust Cases in the Courts ...................................................................................................... 5
3.3
Statistics on Private and Government Cases Filed...................................................................... 7
3.4
Significant Enforcement Actions ................................................................................................ 7
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 .......................................... 14
4.1
Enforcement of Pre-merger Notification Rules ........................................................................ 14
4.2
Select Significant Merger Matters ............................................................................................ 14
5. International antitrust cooperation and outreach ................................................................................ 20
5.1
International Antitrust Cooperation Developments .................................................................. 20
5.2
Outreach .................................................................................................................................... 22
6.
Regulatory and Trade Policy Matters ............................................................................................. 23
6.1
Regulatory Policies ................................................................................................................... 23
7.
New Studies Related to Antitrust Policy ........................................................................................ 26
7.1
Joint Conferences and Reports.................................................................................................. 26
7.2
FTC Conferences, Reports, and Economic Working Papers .................................................... 26
7.3
DOJ Conferences, Reports, and Economic Working Papers .................................................... 27
APPENDICES .............................................................................................................................................. 28
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1.
Introduction
1.
This report describes federal antitrust developments in the United States for the period of October
1, 2011 through September 30, 2012 (“FY 2012”).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 2012, see the FTC in 2012 annual report, available at
www.ftc.gov/os/highlights/2012/index.shtml, and the DOJ’s Spring 2013 Division Update, available at
www.justice.gov/atr/public/division-update/2013/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. Leslie C. Overton became DAAG for
Civil Enforcement in November 2011; she 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.
3.
President Obama designated FTC Commissioner Edith Ramirez to serve as Chairwoman,
effective March 4, 2013. Chairman Jon Leibowitz resigned in February 2013. On January 11, 2013,
following confirmation by the U.S. Senate, Joshua Wright was sworn in as Commissioner. Maureen K.
Ohlhausen was sworn in as Commissioner on April 4, 2012.
4.
On December 31, 2012, the FTC’s Director of the Bureau of Consumer Protection David
Vladeck and Executive Director Eileen Harrington resigned and Chairman Leibowitz appointed Charles
Harwood Acting Director of the Bureau of Consumer Protection and Pat Bak Acting Executive Director.
On November 13, 2012, General Counsel Willard Tom resigned and Chairman Leibowitz appointed David
Shonka Acting General Counsel. On August 3, 2012, Chairman Leibowitz appointed Andrew Gavil as
Director of the Office of Policy Planning and Steven Bellovin as the FTC’s Chief Technologist. On July 1,
2012, Howard Shelanski began serving as Director of the Bureau of Economics.
2.
Changes in law or policies
2.1
Changes in Antitrust Rules, Policies, or Guidelines
5.
FTC Investigatory Process. On September 27, 2012, after a public comment period, the FTC
issued changes to agency procedure that are aimed at streamlining the FTC’s investigatory process,
keeping pace with electronic evidence discovery, and providing more detail on how the FTC evaluates
allegations of misconduct by attorneys practicing before the Commission. The changes concern the
procedures in Parts 2 and 4 of the FTC’s Rules of Practice, ensuring that they are efficient, effective, and
not unduly burdensome on outside parties. See www.ftc.gov/opa/2012/09/finalrule.shtm.
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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6.
Changes to Premerger Notification Rules. On August 13, 2012, the Commission issued a
Notice of Proposed Rulemaking proposing changes to the premerger notification rules under the Hart
Scott-Rodino Antitrust Improvements Act of 1976 (“HSR Act”) related to the transfer of exclusive patent
rights in the pharmaceutical industry. The proposed rule clarifies when a transfer of exclusive rights to a
patent in the pharmaceutical industry results in a potentially reportable asset acquisition under the HSR
Act. The comment period ended on October 25, 2012, and the Commission is finalizing the amendments.
See www.ftc.gov/opa/2012/08/hsr.shtm.
7.
Enforcement Policy Regarding Accountable Care Organizations. On October 20, 2011,
following a public comment period, the Agencies issued a joint policy statement detailing how the
Agencies will enforce U.S. antitrust laws with respect to new Accountable Care Organizations (“ACOs”).
An ACO is an organization of health care providers that jointly offer services to reduce costs and improve
the quality of patient care. Under the Affordable Care Act, ACOs will serve Medicare fee-for-service
beneficiaries under the Medicare Shared Savings Program. The Agencies will not challenge as per se
illegal a Shared Savings Program ACO that jointly negotiates with private insurers to serve patients in
commercial markets if the ACO satisfies certain conditions. The policy statement also preserves an
antitrust “safety zone” for certain ACOs. To fall within the safety zone, an ACO’s independent
participants that provide a common service must have a combined share of 30 percent or less of each
common service in each participant’s Primary Service Area (“PSA”), where two or more participants
provide that service to patients in that PSA. The Agencies will offer voluntary expedited 90-day reviews
for
newly
formed
ACOs
that
are
seeking
additional
guidance.
See
www.justice.gov/atr/public/press_releases/2011/276482.pdf.
2.2
Proposals to Change Antitrust Laws, Related Legislation or Policies
8.
On July 7, 2012, FTC Commissioner Edith Ramirez testified before Congress, expressing
concern about the prospect that companies that own standard-essential patents that are subject to
commitments to license on reasonable and non-discriminatory terms may be able to “hold up” other firms
by obtaining an injunction or exclusion order blocking those firms’ products from the U.S. market. See
www.ftc.gov/opa/2012/07/septestimony.shtm.
3.
Enforcement of antitrust law and policies: actions against anticompetitive practices
3.1
Staffing and Enforcement Statistics
3.1.1
FTC
9.
During FY 2012, the FTC employed approximately 544 staff and spent approximately
$136 million in furtherance of its Maintaining Competition mission.
10.
During FY 2012, 1,429 proposed mergers and acquisitions were reported for review under the
HSR Act, a 1.4 percent decrease from the number of HSR transactions reported during FY 2011.
Commission staff issued requests for additional information (“second requests”) in 20 transactions. The
Commission challenged 25 mergers, 15 of which were settled with consent orders, and seven of which
were abandoned or restructured as a result of antitrust concerns raised during the investigation. The
Commission challenged three mergers in federal court. In one matter, the Commission’s action prompted
the parties to abandon the merger; in the second case, the Commission secured a preliminary injunction
after which the parties abandoned the merger. In the third matter, the Commission issued a consent order
requiring divestiture of the assets with a competitive overlap, but allowing the acquisition to proceed in
other respects.
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11.
During FY 2012, the FTC staff opened 32 non-merger initial phase investigations. The
Commission brought four non-merger enforcement actions. Three of these actions were resolved by
consent order. In the fourth matter, the FTC filed complaints against the three largest U.S. suppliers of
iron pipe fittings for illegally conspiring to set prices, and against one of the companies for illegally
maintaining its monopoly power. The charges against the first two companies were resolved by consent
orders. Regarding the third company, the FTC’s administrative law judge dismissed illegal price-setting
charges, but found that the company illegally excluded competitors from the market for U.S. made ductile
iron pipe fittings.
12.
The Commission filed amicus curiae briefs in ten cases (two before the Supreme Court and eight
before federal appeals and district courts). The FTC provided one advisory opinion (see Section 3.5
below) and submitted 16 advocacy filings (see www.ftc.gov/opp/advocacy_date.shtm).
3.1.2
DOJ
13.
At the end of FY 2012, the Division had 691 employees: 332 attorneys, 49 economists, 147
paralegals, and 163 other professional staff. For FY 2012, the Division received an appropriation of
$159.6 million.
14.
During FY 2012, the Division opened 108 investigations and filed 80 civil and criminal cases in
federal district court. In FY 2012, the Division was party to six antitrust cases decided by the federal
courts of appeals.
15.
During FY 2012, the Division filed 67 criminal cases, in which it charged a total of 16
corporations and 63 individuals with federal crimes. Thirty-three corporate defendants and 31 individuals
were assessed fines totaling $1.5 billion and 45 individuals were sentenced to a total of 33,603 days of
incarceration; another four individuals were sentenced to spend a total of 540 days in some form of
alternative confinement.
16.
During FY 2012, the Division investigated 74 mergers and challenged eight of them in court; 11
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 519 bank mergers. The Division opened 83 civil investigations (merger and nonmerger), and issued 474 civil investigative demands (a form of compulsory process). The Division filed
five non-merger civil complaints. Also during FY 2012, the Division issued one business review letter.
3.2
Antitrust Cases in the Courts
3.2.1
United States Supreme Court
17.
On March 25, 2013, the U.S. Supreme Court heard oral arguments in Federal Trade Commission
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 testosteronereplacement drug, 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.
18.
The main issue before the Supreme Court concerns the standard of review for “pay-for-delay” or
reverse-payment settlements. Presently, there is a split of authority among the United States federal Courts
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of Appeal as to the standard of review. The Antitrust Agencies and at least one U.S. court support a
“presumptively unlawful” standard, under which patent infringement lawsuit settlements that involve a
reverse payment would be treated as “presumptively anticompetitive under a ‘quick look’ rule of reason
analysis.”2 Other U.S. courts have held that “absent sham litigation or fraud in obtaining the patent, a
reverse payment settlement” does not violate the antitrust laws “so long as its anticompetitive effects fall
within
the
scope
of
the
exclusionary
potential
of
the
patent.”3
See
www.ftc.gov/opa/2012/10/androgel.shtm. The Supreme Court is expected to issue a ruling in the case in
June 2013.
19.
On February 19, 2013, the U.S. Supreme Court unanimously ruled in favor of the FTC that the
state-action doctrine did not immunize Phoebe Putney Health System, Inc.’s acquisition of Palmyra Park
Hospital, Inc. from the federal antitrust laws. Federal Trade Commission v. Phoebe Putney Health System,
Inc., 133 S. Ct. 1003 (2013). 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 acutecare hospital services charged to commercial health plans, harming patients and local employers and
employees.
20.
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, unanimously upholding the FTC’s position and
reversing the lower 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 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 the state-action doctrine does not apply.
See
www.ftc.gov/opa/2013/02/phoebe.shtm.
3.2.2
U.S. Court of Appeals Cases
21.
On July 11, 2012, the U.S. Court of Appeals for the Eleventh Circuit upheld the FTC’s
adjudicative ruling that Polypore International, a manufacturer of battery components, had illegally
acquired Microporous Products L.P., a rival manufacturer. The Commission found that Polypore’s
acquisition of Microporous violated the antitrust laws by reducing competition in three of four North
2
In re K-Dur Antitrust Litig., 686 F.3d 197, 218 (3d Cir. 2012) (rejecting the scope of the patent test, and
applying “a quick look rule of reason analysis based on the economic realities of the reverse payment
settlement rather than the labels applied by the settling parties”); FTC v. Actavis, Inc., Brief for the
Petitioner at 17, available at http://sblog.s3.amazonaws.com/wp-content/uploads/2013/01/12
416tsUnitedStates.pdf; Arkansas Carpenters Health and Welfare Fund v. Bayer AG, No. 05-2851 (2d Cir.
2009), Brief for the United States in Response to the Court’s Invitation, available at
http://www.justice.gov/atr/cases/f247700/247708.pdf.
3
FTC v. Watson Pharm., Inc., 677 F.3d 1298, 1312 (11th Cir. 2012), cert. granted, 133 S. Ct. 787 (2012);
see also Ark. Carpenters Health & Welfare Fund v. Bayer AG, 604 F.3d 98, 105 (2d Cir. 2010), cert.
denied, 131 S. Ct. 1606 (2011) (“Most courts, . . . including this Court, have held that the right to enter into
reverse exclusionary payment agreements fall within the terms of the exclusionary grant conferred by the
branded manufacturer’s patent.”) (citations omitted); In re Ciprofloxacin Hydrochloride Antitrust Litig.,
544 F.3d 1323, 1333 (Fed. Cir. 2008), cert denied, 129 S. Ct. 2828 (2009); In re Tamoxifen Citrate
Antitrust Litig., 466 F.3d 187, 208-09 & n.22, 212-13 (2d Cir. 2006) (reverse-payment settlements are
illegal only if the patentee is extending the scope of its patents or is engaging in fraud or sham litigation);
Schering-Plough Corp. v. FTC, 402 F.3d 1056, 1065-66 (11th Cir. 2005) (same).
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American markets for flooded lead-acid battery separators. The Commission decision was made after an
administrative trial and an initial decision by an administrative law judge. The U.S. Court of Appeals for
the Eleventh Circuit upheld in full both the FTC’s finding of liability and its remedy ordering the
divestiture of all acquired assets. The U.S. Supreme Court denied Polypore’s request to appeal the ruling.
See www.ftc.gov/opa/2012/07/polypore.shtm.
22.
On June 27, 2012, in a unanimous en banc decision, the U.S. Court of Appeals for the Seventh
Circuit held that the Foreign Trade Antitrust Improvements Act of 1982 (“FTAIA”) “sets forth an element
of an antitrust claim, not a jurisdictional limit on the power of federal courts.” Minn-Chem, Inc. v. Agrium,
Inc., 683 F.3d 845, 852 (7th Cir. 2012) (en banc). The court then addressed the FTAIA’s import
commerce and direct effects exceptions. The court held that “[t]hose transactions that are directly between
the plaintiff purchasers and the defendant cartel members are the import commerce of the United States”
and that a plaintiff challenging conduct involving import commerce under the Sherman Act must show that
the conduct had a substantial and intended effect in the United States. Then the court turned to what it
should mean for foreign conduct to have a “direct, substantial, and reasonably foreseeable” effect on U.S.
commerce. The court rejected as too restrictive an interpretation that an effect is “direct” only when it
follows “as an immediate consequence” of the defendant’s conduct. Instead, the court adopted a standard
urged by the United States as amicus curiae, that “direct” effect in the FTAIA context requires only “a
reasonably proximate causal nexus.”
23.
In other court of appeals cases, the United States defended various criminal convictions and
sentences based on established principles of criminal antitrust law, procedure, and evidence.
3.3
Statistics on Private and Government Cases Filed
24.
According to the 2012 Annual Report of the Director of the Administrative Office of the U.S.
Courts, 702 new civil antitrust actions, both government and private, were filed in the federal district courts
in
FY
2012.
See
Table
C-2
of
the
report,
available
at
www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2012/appendices/C02ASep12.pdf.
3.4
Significant Enforcement Actions
3.4.1
DOJ Criminal Enforcement
25.
The Division obtained very significant fines and prison sentences in FY 2012, and won jury trial
victories relating to the liquid crystal display (“LCD”), municipal bonds, and coastal freight investigations.
The Division also obtained many convictions in investigations of cartels involving auto parts, real estate
foreclosure auctions, and tax liens.
26.
In FY 2012, the Division filed 67 criminal cases and obtained a record $1.14 billion in criminal
fines. In these cases, the Division charged 16 corporations and 63 individuals, and courts imposed 45
prison terms with an average sentence of just over two years per defendant.
27.
The FY 2012 $1.14 billion criminal fine total is the highest ever obtained by the Division in a
single year and the second time since 2009 that total fines exceeded $1 billion. Since 2009, the Division
has obtained more than $3 billion in criminal fines. During FY 2012, 78 percent of the individuals
sentenced in Division cases were sentenced to prison time. The Division is now sending approximately
twice as many defendants to prison as it did in the 1990s, and the defendants sentenced to prison are
serving longer terms, reflecting the harm inflicted by the cartels in which they participated. In FY 2012, the
average prison sentence for Division defendants was almost 25 months, more than three times the average
of eight months in the 1990s.
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DAF/COMP/AR(2013)10
28.
Eighteen foreign nationals were sentenced to average prison sentences of 16 months in
connection with international cartel investigations during FY 2012, including two 36-month sentences
imposed upon individuals from Taiwan convicted at trial for conspiring to fix prices in the liquid crystal
display panel industry, and 24-month sentences for two Japanese executives for their participation in
conspiracies to fix prices and rig bids in the auto parts industry.
29.
Liquid Crystal Display Panels (“LCDs”). The Division’s ongoing investigation into price
fixing in the LCD panel industry has resulted in criminal fines totaling $1.39 billion. As a result of the
investigation, 10 companies and 13 executives have been convicted. On March 13, 2012, following an
eight-week trial, a jury in the Northern District of California returned guilty verdicts against Taiwan-based
AU Optronics (“AUO”), its American subsidiary, AU Optronics America, and the former president and
former vice president of AUO, respectively, for their participation in the price-fixing conspiracy. On
September 20, 2012, AUO was sentenced to pay a $500 million fine and the convicted executives each
were sentenced to serve three years in prison. In December 2012, the Division retried a third AUO
executive after the jury in the March trial was unable to return a unanimous verdict as to that executive.
After a three week trial, on December 18, 2012, the third executive was found guilty. See
www.justice.gov/atr/public/press_releases/2012/281032.pdf
and
www.justice.gov/atr/public/press_releases/2012/287189.pdf.
30.
Municipal Bonds. The Division’s ongoing investigation into bid rigging in the municipal bonds
market has resulted in convictions of 19 individuals and one company, including convictions of six
individuals at two separate jury trials. On May 11, 2012, three former General Electric Co. executives
were convicted for their participation in conspiracies related to bidding for contracts for the investment of
municipal bond proceeds and other municipal finance contracts. On August 31, 2012, three former UBS
AG executives were convicted at trial of conspiracy and fraud charges for corrupting the bidding process
for more than a dozen investment agreements to increase the number and profitability of the agreements
awarded to UBS. The municipal bonds investigation has also produced settlements with a number of large
financial institutions involved in the conspiracies. To date, the implicated firms have agreed to pay a total
of nearly $745 million in restitution, penalties, and disgorgement to federal and state agencies. See
www.justice.gov/atr/public/press_releases/2012/283187.pdf
and
www.justice.gov/atr/public/press_releases/2012/286598.pdf.
31.
Coastal Freight. The Division’s ongoing investigation into price fixing, bid rigging, and other
anticompetitive conduct in the coastal water freight transportation industry has resulted in convictions of
three companies and six individuals. To date, the investigation has resulted in $46 million in criminal fines
and prison sentences for five individuals, ranging from seven months to four years. On January 29, 2013,
following a two-week trial, a jury in Puerto Rico convicted the former president of a coastal shipping
company for his participation in a conspiracy to fix rates and surcharges for freight between the continental
United States and Puerto Rico. He now awaits sentencing. The following corporate fines have been
obtained in the coastal freight investigation:
•
Crowley
Liner
Services
Inc.,
(www.justice.gov/atr/public/press_releases/2012/285625.pdf)
•
Sea Star Line LLC, $14.2 million (www.justice.gov/atr/public/press_releases/2011/277501.pdf)
•
Horizon Lines LLC, $15 million (www.justice.gov/atr/public/press_releases/2011/267605.pdf)
$17
million
32.
Auto Parts. The Division has dedicated significant resources to the ongoing automobile parts
investigation. To date, the investigation has yielded charges against nine companies and 12 individuals
and more than $809 million in criminal fines for participation in conspiracies to fix prices of and rig bids
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DAF/COMP/AR(2013)10
on automobile parts, including safety systems such as seatbelts, airbags, steering wheels, and antilock
brake systems, and critical parts such as instrument panel clusters and wire harnesses. Two of the
executives charged thus far are Japanese citizens; each was sentenced in 2012 to serve two years in prison,
the longest sentences ever imposed on foreign nationals voluntarily submitting to U.S. jurisdiction for an
antitrust violation. During FY 2012, this investigation also yielded the third-largest criminal antitrust fine
ever imposed—a $470 million fine against Yazaki Corporation. The Division continues to cooperate with
its counterparts in Japan, Korea, the EU, and Canada, among others, on this investigation. The following
corporate fines have been imposed on the following parties in the course of the auto parts investigation
since the beginning of FY 2012:
•
Tokai Rika Co. Ltd., $17.7 million (www.justice.gov/atr/public/press_releases/2012/288353.pdf)
•
Nippon Seiki Co. Ltd, $1 million (www.justice.gov/atr/public/press_releases/2012/286416.pdf)
•
TRW
Deutschland
Holding
GmbH,
(www.justice.gov/atr/public/press_releases/2012/285504.pdf)
•
Autoliv Inc., $14.5 million (www.justice.gov/atr/public/press_releases/2012/283960.pdf)
•
Fujikura Ltd., $20 million (www.justice.gov/atr/public/press_releases/2012/282538.pdf)
•
G.S. Electech Inc., $2.75 million (www.justice.gov/atr/public/press_releases/2012/281867.pdf)
•
Yazaki Corporation, $470 million (www.justice.gov/atr/public/press_releases/2012/279734.pdf)
•
DENSO Corporation, $78 million (www.justice.gov/atr/public/press_releases/2012/279734.pdf)
$5.1
million
33.
Real Estate Foreclosure and Tax Liens Auctions. The Division’s ongoing efforts to
investigate and prosecute bid rigging and fraud at real estate auctions across the U.S. thus far have resulted
in charges against 53 individuals and two companies. The Division has partnered with the Federal Bureau
of Investigation (“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. Similar collusive conduct also has been detected among bidders for public tax
liens, and eight individuals and three companies have pleaded guilty as part of an ongoing investigation
into bid rigging and fraud related to municipal tax lien auctions in New Jersey.
See
www.justice.gov/atr/public/press_releases/2012/286053.pdf
and
www.justice.gov/atr/public/press_releases/2012/287435.pdf.
34.
LIBOR. On February 6, 2013, the Division announced that RBS Securities Japan Limited, a
wholly-owned subsidiary of The Royal Bank of Scotland plc (“RBS”), agreed to plead guilty to a criminal
information charging it with one count of wire fraud for engaging in a scheme to defraud counterparties to
interest rate derivatives trades by secretly manipulating the Japanese Yen London Interbank Offered Rate
(“LIBOR”), a leading benchmark used in financial products and transactions around the world. RBS
Securities Japan agreed to pay a $50 million fine. Additionally, it was announced that a criminal
information would also be filed against RBS as part of a deferred prosecution agreement (“DPA”),
charging RBS with wire fraud for its role in manipulating LIBOR benchmark interest rates, and with
participation in a price-fixing conspiracy by rigging the Yen LIBOR benchmark interest rate with other
banks. The DPA requires the bank to admit and accept responsibility for its misconduct, to continue
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DAF/COMP/AR(2013)10
cooperating with the Justice Department in its ongoing investigation, and to pay a $100 million penalty
beyond
the
fine
imposed
on
RBS
Securities
Japan.
See
www.justice.gov/atr/public/press_releases/2013/292421.pdf
and
www.justice.gov/atr/public/press_releases/2012/290478.pdf.
35.
Together with approximately $462 million in regulatory penalties and disgorgement – $325
million as a result of a Commodity Futures Trading Commission (“CFTC”) action and approximately $137
million as a result of a UK Financial Services Authority (“FSA”) action – the Department’s criminal
penalties bring the total amount of the resolution with RBS and RBS Securities Japan to approximately
$612 million.
36.
In addition, a criminal complaint was unsealed in the U.S. District Court for the Southern District
of New York in December 2012, charging two former senior UBS traders with colluding to manipulate the
Yen LIBOR rate. These defendants remain fugitives.
3.4.2
DOJ Civil Non-Merger Enforcement
37.
Verizon Cable Spectrum. In U.S. and State of New York v. Verizon Communications Inc., et al.,
the Division required Verizon and four of the largest cable companies in the U.S. – Comcast, Time Warner
Cable, Bright House Networks, and Cox Communications – to revise a series of agreements concerning
both the sale of bundled wireless and wireline services, and the formation of a technology research joint
venture. According to the complaint filed on August 16, 2012, the agreements, if left unaltered, would
have harmed competition by diminishing the companies’ incentive to compete, resulting in higher prices
and lower quality for consumers. To resolve these competitive concerns, the Division filed a proposed
settlement simultaneously with the complaint. The settlement removed provisions that would lessen the
companies’ incentives to compete aggressively in the areas where Verizon’s FiOS services offer a critical
competitive alternative to the cable companies’ video and broadband products. It also limited the duration
of the companies’ collaboration to December 2016 in important respects, ensuring that they retain
incentives to compete against one another. The announcement came after a closely coordinated
investigation with the Federal Communications Commission and the New York State Attorney General’s
Office. The Division also stated that it would allow both Verizon’s proposed acquisitions of spectrum
from the cable companies and T-Mobile USA’s contingent purchase of a significant portion of that
spectrum from Verizon to go forward. The Division said that the spectrum transactions facilitate active use
of an important national resource and thereby promise substantial benefit to wireless consumers. The case
is currently awaiting court approval. See www.justice.gov/atr/public/press_releases/2012/286098.pdf.
38.
E-Books. On April 11, 2012, Attorney General Eric Holder and then-Acting AAG Sharis Pozen
announced in a press conference that the Division filed an antitrust lawsuit against Apple Inc. and five
major book publishers – Hachette Book Group (USA), HarperCollins Publishers L.L.C., Simon & Schuster
Inc., Holtzbrinck Publishers LLC, which does business as Macmillan, and Penguin Group (USA) – for
conspiring to end e-book retailers’ freedom to compete on price, take control of pricing from e-book
retailers, and substantially increase the prices that consumers pay for e-books. The Division said that the
publishers prevented retail price competition resulting in consumers paying millions of dollars more for
their e-books. On the same day, a proposed settlement was filed simultaneously with the complaint to
resolve the Division’s antitrust concerns with Hachette, HarperCollins, and Simon & Schuster, and
required the companies to grant retailers the freedom to reduce the prices of their e-book titles. The
settlement also imposed a strong antitrust compliance program on the three companies. The court
approved the settlement on September 6, 2012. The Division reached similar settlements, currently
awaiting court approval, with Penguin and Macmillan on December 18, 2012, and February 8, 2013,
respectively. The trial against Apple began in June 2013. The Division and the European Commission
cooperated closely throughout the course of their respective investigations. The Division also worked
10
DAF/COMP/AR(2013)10
closely
with
the
states
of
Connecticut
www.justice.gov/atr/public/press_releases/2013/292578.pdf.
3.4.3
and
Texas.
See
FTC Non-Merger Enforcement Actions
39.
In the Matter of Motorola Mobility LLC and Google, Inc.. On January 3, 2013, the FTC
accepted for public comment a settlement agreement containing a consent order generally barring Google,
and its wholly-owned subsidiary Motorola, from seeking injunctive relief based on infringement of a
FRAND-encumbered standard-essential patent (SEP) unless certain conditions are met. Under the terms of
the settlement agreement, Google is abiding by the terms of the proposed Order while the Commission
considers the public comments. The Complaint alleges that Google engaged in unfair methods of
competition by breaching its commitments to standard-setting organizations (SSOs) to license its SEPs on
FRAND terms.4 Except in limited circumstances (such as where a firm that explicitly states it will not
license Google’s SEPs on FRAND terms), the proposed Order requires that: (a) at least six months prior
to pursuing injunctive relief against a potential licensee, Google make a binding written offer to license its
SEPs to such licensee; and (b) at least 60 days prior to pursuing injunctive relief against a potential
licensee, Google make a binding written offer of binding arbitration to establish a licensing agreement.
Furthermore, if a potential licensee seeks judicial determination of FRAND (in any U.S. district court), the
Order prohibits Google from seeking injunction during the pendency of the judicial proceeding, including
any appeals. Google is relieved of its obligation under the Order not to seek an injunction if a potential
licensee does not commit to entering a license on terms determined through the binding arbitration or
FRAND determination proceeding the licensee elects to participate in. Other than demanding reciprocity
(i.e., conditioning an offer to license on receiving a cross-license to the licensee’s FRAND-encumbered
SEPs to the same standard), Google cannot require additional patents be included in binding arbitration and
is not required to accept a potential licensee’s request to include other patents (except for a demand of
reciprocity). The potential licensee may select the arbitration organization from among those identified in
the Order and the arbitration is to be conducted pursuant to the rules of the organization. Google and the
potential licensee may alter the terms of binding arbitration in any manner they wish by mutual agreement.
40.
With respect to pending legal actions, the proposed Order bars Google from obtaining or
enforcing injunctive relief based on infringement of its FRAND-encumbered SEPs unless it satisfies the
conditions in the Order. Lastly, the proposed Order provides that Google is not prohibited from seeking
injunctive relief against a potential licensee who violates its own FRAND commitment by seeking to
enjoin a Google product based on infringement of the potential licensee’s FRAND-encumbered SEP.
41.
Google Inc. Also on January 3, 2013, the Commission closed its extensive investigation into
allegations that Google had manipulated its search algorithms to harm vertical websites and unfairly
promote its own competing vertical properties (a practice commonly known as “search bias”). The
Commission concluded that, “the evidence presented at this time does not support the allegations that
Google’s display of its own vertical content at or near the top of its search results page was a product
design change undertaken without a legitimate business justification.”5 Similarly, the Commission
concluded that it did not find “sufficient evidence that Google manipulates its search algorithms to unfairly
disadvantage vertical websites that compete with Google-owned vertical properties.”6
4
Complaint ¶ 1, available at http://www.ftc.gov/os/caselist/1210120/130103googlemotorolacmpt.pdf.
5
Commission
Stmt.
Regarding
Google’s
Search
Practices
http://www.ftc.gov/os/2013/01/130103googlesearchstmtofcomm.pdf.
6
Id.
11
at
3,
available
at
DAF/COMP/AR(2013)10
42.
Among other things, the FTC also investigated allegations that Google: (a) misappropriated
content, such as user reviews and star ratings, from competing websites in order to improve its own vertical
offerings; and (b) used contractual conditions governing the use of its AdWords API to make it more
difficult for an advertiser to simultaneously manage a campaign in search advertising.
43.
In response to the FTC’s investigation, Google voluntarily agreed to (a) make available a webbased notice form that provides website owners with the option to opt out from display on Google’s
Covered Webpages of content from their website that has been crawled by Google, and (b) remove
restrictions on the use of its online search advertising platform, AdWords, that may make it more difficult
for advertisers to coordinate online advertising campaigns across multiple platforms.
44.
Coopharma Pharmacy – Farmacia Cuquimar. On November 7, 2012, following a public
comment period, the Commission approved a final order settling charges that a Puerto Rican cooperative
of pharmacy owners, Cooperativa de Farmacias Puertorriquenas, known as “Coopharma,” harmed
competition by negotiating and entering into agreements among its member pharmacies to fix prices and
by acting collectively to pressure third-party payers to pay its members higher prices. The final order
prohibits Coopharma from entering into or facilitating agreements between or among any pharmacies, and
prohibits it from facilitating information exchanges between pharmacies regarding whether, or on what
terms, to contract with a payer. It also bars attempts to engage in any of the conduct prohibited by the
order. Finally, the order requires Coopharma to terminate its primary services contracts upon the payer’s
request. See http://ftc.gov/opa/2012/11/coopharma.shtm.
45.
Sigma/McWane Inc. On February 28, 2012, following a public comment period, the
Commission approved a final order settling charges that Sigma Corporation engaged in illegal
anticompetitive practices to protect its share of the market for iron pipe fitting used in municipal water
systems nationwide. In settling the FTC’s charges, Sigma agreed not to use similar anticompetitive tactics
in the future. At the same time the FTC settled with Sigma, it also charged Sigma’s competitors, McWane,
Inc. and Star Pipe Products, Ltd., with acting anticompetitively in the market for iron pipe fittings. On
March 20, 2012, Star Pipe Products agreed to settle charges that it conspired with Sigma and McWane to
increase the prices at which pipe fittings were sold nationwide. Under a proposed order settling the FTC’s
charges, Star will be barred from similar anticompetitive conduct in the future. On May 9, 2013, an
administrative law judge issued a decision holding that McWane violated the antitrust laws when it
excluded competitors from the market for U.S.-made ductile iron pipe fittings, but dismissed charges that
McWane illegally conspired with its competitors to raise and stabilize the price of ductile iron pipe fittings.
See www.ftc.gov/opa/2013/05/mcwane.shtm.
46.
Pool Corp. On January 13, 2012, following a public comment period, the Commission approved
a final order resolving charges that Pool Corp., the largest distributor of swimming pool products in the
United States, used its monopoly power to thwart entry by new competitors by blocking them from buying
pool products directly from manufacturers. The FTC alleged that Pool Corp.’s strategy significantly raised
the costs incurred by its rivals, thereby lowering sales, increasing prices, and reducing the number of
choices available to consumers. The final FTC order requires Pool Corp. to stop engaging in the
anticompetitive practices through which it has allegedly been keeping out new competitors in local markets
around the nation. See www.ftc.gov/opa/2012/01/ftcpoolcorp.shtm.
3.5
Advisory Letters from the FTC
47.
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 2012, the FTC staff issued one advisory opinion on a voluntary fee program in the heating oil industry
12
DAF/COMP/AR(2013)10
to fund consumer education and training purposes (discussed in ¶ 47 below). For more information on the
Commission’s advisory letters, see www.ftc.gov/ftc/opinions.shtm.
48.
Independent Connecticut Petroleum Association. On July 2, 2012, FTC staff issued an
advisory opinion letter in response to a request from the Independent Connecticut Petroleum Association,
stating that it has no present intention to recommend a challenge to the proposed system, which would
collect a voluntary assessment from heating oil retailers and use the money to fund consumer education
and retailer training programs. The FTC staff concluded that this new program is unlikely to harm
competition, for several reasons. First, the education and training programs are likely to create value to
consumers, which likely will outweigh any minimal incremental increase in costs. Second, the voluntary
nature of the program will allow retailers to withdraw from the program and compete on the basis of lower
prices as they see fit. Finally, any data collected through the program will be aggregated before it is
transferred and reported, so that industry members will not learn competitively sensitive information about
other firms in the market. The Commission further noted that the proposed program is similar to one
previously approved by the U.S. Congress. See http://ftc.gov/opa/2012/07/connheating.shtm.
3.6
Business Reviews Conducted by the DOJ
49.
Under the Department’s business review procedure, an organization may submit a proposed
action to the Department and receive a statement as to whether the Department would likely challenge the
action under the antitrust laws. The Department issued two business review letters in FY 2012. The
business review letters can be found at www.usdoj.gov/atr/public/busreview/letters.htm.
50.
Joint Venture of Nuclear Power Plant Operators. On July 3, 2012, the Division announced it
would not challenge a proposal by seven nuclear power plant operators to share resources and coordinate
best practices and other operational activities through a proposed venture to be named the STARS Alliance
LLC. The members of the proposed venture each operate single nuclear electric generation plants of a
similar design – pressurized water reactors – and vintage. None of the proposed activities involve the
procurement of goods and services or the sale or purchase of electric power. Membership and participation
in all of the activities of the proposed STARS joint venture is voluntary. Based on the representations
made by STARS members, the Division concluded that it does not appear likely that the cooperative
activities STARS proposes to undertake will restrict competition. The prohibitions on STARS members
sharing competitively sensitive information provide additional safeguards to avoid any threat to
competition.
51.
Worker Rights Consortium and Designated Suppliers Program. On December 16, 2011, the
Division announced that it would not challenge a proposal by the Worker Rights Consortium (“WRC”) to
implement the Designated Suppliers Program. The WRC is a nonprofit corporation that was formed to
improve working conditions and labor standards. According to the proposal by the WRC, the Designated
Suppliers Program is designed to enable colleges and universities to ensure that apparel with their school
names and insignia is made in factories that provide fair labor conditions for their employees, including
paying their employees a living wage. Based on the representations made by the WRC, the Division noted
that the proposal is unlikely to lessen competition in the collegiate apparel sector. Incorporation of the
proposed licensing terms is optional and is unlikely to have a substantial effect on licensing competition
among potentially participating schools. The Division also noted that the proposal is unlikely to have a
substantial effect on downstream competition for apparel sales, and that the factories affected by the
proposed licensing terms are likely to constitute only a tiny portion of the labor market.
13
DAF/COMP/AR(2013)10
4.
Enforcement of antitrust laws and policies: mergers and concentrations
4.1
Enforcement of Pre-merger Notification Rules
52.
On September 25, 2012, the Division announced that Biglari Holdings Inc. would pay an
$850,000 civil penalty to settle charges that it violated premerger reporting and waiting requirements when
it acquired Cracker Barrel voting securities. According to the complaint, Biglari Holdings failed to comply
with the antitrust premerger notification requirements of the HSR Act before acquiring voting securities of
Cracker Barrel Old Country Store Inc. in June 2011. Although the HSR Act exempts from its premerger
notification requirements certain acquisitions “solely for the purpose of investment,” Biglari Holdings’
acquisitions were not made solely for the purpose of investment. The complaint alleged that Biglari
Holdings was in violation of the HSR Act from June 8, 2011, through September 22, 2011. At the same
time, the Division filed a proposed settlement that, if approved by the court, will settle the charges. See
www.justice.gov/atr/public/press_releases/2012/287345.pdf.
53.
On May 3, 2012, the Division announced that Mr. Kyoungwon Pyo, an executive of Hyosung
Corporation, had agreed to plead guilty and serve five months in a U.S. prison for obstruction of justice
charges in connection with an automated teller machine (“ATM”) merger investigation conducted by the
Division. The Division said Mr. Pyo, in his role as senior vice president for corporate strategy of Hyosung
Corporation, an affiliate of Korea-based Nautilus Hyosung Holdings Inc. (“NHI”), altered and directed
subordinates to alter numerous existing corporate documents before they were submitted in conjunction
with mandatory premerger filings. The Division said that Mr. Pyo’s actions took place in or about July and
August 2008. At the time, the Division was investigating NHI’s proposed acquisition of Triton Systems of
Delaware Inc. NHI abandoned the proposed acquisition of competitor Triton Systems before the Division
reached a decision determining whether to challenge the transaction. On October 20, 2011, NHI pled
guilty and paid a $200,000 criminal fine for its role in the obstruction of justice .
See
www.justice.gov/atr/public/press_releases/2012/282873.pdf.
54.
On December 16, 2011, the Division announced that Comcast Corporation’s CEO Brian L.
Roberts would pay a $500,000 civil penalty to settle charges that he violated premerger reporting and
waiting requirements when he acquired Comcast voting securities. According to the complaint, which was
filed with a proposed settlement, Mr. Roberts failed to comply with the antitrust premerger notification
requirements of the HSR Act before acquiring voting securities of Comcast as part of his compensation as
chairman and chief executive officer of Comcast beginning on October 22, 2007, which resulted in his
holding more than $119.6 million of Comcast stock. On August 25, 2009, Mr. Roberts made a corrective
filing for Comcast voting securities he had acquired. Although this was the first time Mr. Roberts has been
charged with an HSR Act violation, he has twice previously made corrective filings regarding transactions
that, he acknowledged, were reportable under the HSR Act, asserting that the failures to file and observe
the waiting period were inadvertent. See www.justice.gov/atr/public/press_releases/2011/278338.pdf.
4.2
Select Significant Merger Matters
4.2.1
FTC Public Merger Investigations and Challenges
55.
Renown Health/Reno Heart Physicians. On August 6, 2012, the FTC challenged Renown
Health’s acquisitions of two cardiology groups in the Reno, Nevada area – Sierra Nevada Cardiology
Associates (SNCA) and Reno Heart Physicians (RHP). Renown is the largest provider of acute care
hospital services in northern Nevada. Prior to the acquisitions, virtually all of the cardiologists in the Reno
area were affiliated with either SNCA or RHP and Renown Health did not employ any cardiologists. The
FTC alleged that Renown Health’s acquisitions of SNCA’s and RHP’s medical practices created a highly
concentrated market for the provision of adult cardiology services in the Reno area. The Commission’s
14
DAF/COMP/AR(2013)10
consent order required Renown to release its staff cardiologists from non-compete contract clauses,
allowing up to 10 of them to join competing cardiology practices.
See
www.ftc.gov/os/caselist/1110101/index.shtm.
56.
Novartis AG/Fougera. On July 16, 2012, the FTC challenged Novartis AG’s $1.5 billion
acquisition of rival pharmaceutical firm, Fougera Holdings, Inc. The Commission alleged that Novartis’s
acquisition likely would have harmed competition in the markets for the marketing rights to four topical
skin care medications. The final order resolving the charges preserves competition in the markets by
requiring Novartis to end a marketing agreement that allows it to sell three of the products, and return the
rights to the fourth product to its manufacturer. See www.ftc.gov/os/caselist/1210144/index.shtm.
57.
Koninklijke Ahold N.V./Safeway. On June 15, 2012, the FTC challenged Koninklijke Ahold
N.V.’s acquisition of Genuardi’s supermarket chain from Safeway, Inc. Ahold is the parent company of
Giant Food Stores, LLC. The Commission alleged that Ahold’s acquisition of Genuardi’s would reduce
the number of supermarket competitors in Newtown, Pennsylvania’s local grocery market from three to
two. To resolve competitive concerns, the Commission required Ahold to sell a supermarket in Newtown
to McCaffrey’s supermarkets. See www.ftc.gov/os/caselist/1210055/index.shtm.
58.
Johnson & Johnson/Synthes. On June 11, 2012, the FTC challenged Johnson & Johnson’s
$21.3 billion acquisition of Synthes, Inc. Johnson & Johnson and Synthes are competing manufacturers of
medical devices. The Commission charged that Johnson & Johnson’s acquisition of Synthes likely would
be anticompetitive and reduce competition for volar distal plating systems, which are medical devices used
for surgically treating serious wrist fractures. The Commission’s consent order requires Johnson &
Johnson to sell its system for surgically treating serious wrist fractures to a third company, Biomet, Inc.
See http://ftc.gov/os/caselist/1110160/index.shtm.
59.
Kinder Morgan/El Paso. On May 1, 2012, the Commission challenged Kinder Morgan, Inc.’s
$38 billion acquisition of El Paso Corporation. The Commission alleged that the acquisition likely would
have reduced competition in several natural gas pipeline transportation and gas processing markets in the
Rocky Mountains region. The Commission’s consent order requires Kinder Morgan to sell three natural
gas pipelines and two gas-processing plants and associated storage capacity in the Rocky Mountains
region. See www.ftc.gov/os/caselist/1210014/index.shtm.
60.
CoStar/LoopNet. On April 26, 2012, the Commission challenged CoStar Group’s $860 million
acquisition of LoopNet, alleging that the acquisition likely would have been anticompetitive in the market
for commercial real estate information services. To resolve these charges, the Commission issued a
consent order requiring CoStar to sell LoopNet’s ownership interest in Xceligent, thus maintaining an
independent third party in the market. The Commission also ordered CoStar to lift non-compete provisions
and allow its customers in long-term contracts to terminate those early, allowing for competitors such as
Xceligent to expand or enter more easily into the commercial real estate information services market. See
www.ftc.gov/os/caselist/1110172/index.shtm.
61.
Western Digital/Hitachi. On March 5, 2012, the FTC challenged Western Digital Corporation’s
$4.5 billion acquisition of rival Hitachi Global Storage Technologies. Both companies manufacture
desktop hard disk drives used in personal computers. The FTC alleged that the acquisition would leave
only two companies in control of the entire worldwide market for hard disk drives, likely resulting in
increased prices to consumers. The Commission entered a consent order requiring Western Digital to
divest to a third company, Toshiba, assets used to manufacture and sell desktop hard disk drives. See
www.ftc.gov/os/caselist/1110122/index.shtm.
15
DAF/COMP/AR(2013)10
62.
Carpenter/Latrobe. On February 29, 2012, the FTC challenged Carpenter Technology’s $410
million merger with specialty metals manufacturer Latrobe. The Commission alleged that Carpenter and
Latrobe were the only companies that made two highly specialized alloys used in the aerospace industry.
The Commission also alleged that the combination of the two companies likely would be anticompetitive
and increase prices for purchasers of the alloys by creating a monopoly in the market. The Commission’s
consent order required Carpenter to divest assets necessary for manufacturing the two alloys to another
metals manufacturer, Eramet S.A. See www.ftc.gov/os/caselist/1110207/index.shtm.
63.
Fresenius/Liberty. On February 28, 2012, the Commission challenged Fresenius Medical Care
AG & Co. KGaA’s $2.1 billion acquisition of Liberty Dialysis Holdings, Inc. The Commission alleged
that Fresenius’s acquisition of Liberty would eliminate head-to-head competition between the two dialysis
providers in 43 regional markets, leading to higher prices and reduced quality for dialysis consumers. The
Commission’s consent order required Fresenius to sell 60 outpatient dialysis clinics in 43 local markets.
See www.ftc.gov/os/caselist/1110170/index.shtm.
64.
AmeriGas/Energy Transfer Partners. On February 28, 2012, the FTC issued a final order
requiring AmeriGas L.P. and Energy Transfer Partners L.P. (ETP), two of the nation’s largest propane
distributors, to amend AmeriGas’s proposed $2.9 billion acquisition of ETP’s Heritage Propane business as
part of a settlement with the FTC. The settlement resolves FTC charges that the transaction would reduce
competition and raise prices in the market for propane exchange cylinders that consumers use to fuel
barbeque grills and patio heaters. The FTC’s settlement protects consumers by requiring AmeriGas to
exclude ETP’s cylinder exchange business, Heritage Propane Express, from the acquisition. See
www.ftc.gov/os/caselist/1210022/index.shtm.
65.
Valeant International Inc./Johnson & Johnson and Valeant International Inc./Sanofi. On
February 22, 2012, the FTC approved final orders requiring Valeant Pharmaceuticals International, Inc.
(“Valeant”) to divest three drugs used to treat different skin ailments, as conditions of acquiring Ortho
Dermatologics, Inc. from Johnson & Johnson, and Dermik Laboratories, Inc. from Sanofi. Under the
settlements, Valeant will sell the manufacturing and marketing rights to drug products that treat acne and
actinic keratosis, a pre-cancerous skin lesion, to Mylan Pharmaceuticals Inc. Valeant also will sell the
marketing rights to a drug that treats fine line wrinkles to Spear Pharmaceuticals, Inc. Both settlements
preserve competition and prevent higher prices that likely would have resulted from the acquisitions. See
http://ftc.gov/os/caselist/1110215/index.shtm and http://ftc.gov/os/caselist/1110216/index.shtm.
66.
Omnicare/PharMerica. On January 27, 2012, the Commission issued an administrative
complaint challenging Omnicare, Inc.’s hostile acquisition of rival long-term care pharmacy provider
PharMerica Corporation. The complaint alleged that the transaction would combine the two largest U.S.
long-term care pharmacies, harming competition and enabling Omnicare to raise the price of drugs. The
FTC also alleged that that combining Omnicare and PharMerica would significantly increase Omnicare’s
already substantial bargaining leverage for certain prescription drug plans. In February 2012, Omnicare
abandoned the proposed acquisition, and the FTC dismissed its administrative complaint. See
www.ftc.gov/os/adjpro/d9352/index.shtm.
67.
LabCorp/Orchid Cellmark. On December 8, 2011, the FTC required laboratory testing
companies Laboratory Corporation of America Holdings (“LabCorp”) and Orchid Cellmark Inc.
(“Orchid”) to divest a portion of Orchid’s paternity testing business to resolve the FTC complaint alleging
that LabCorp’s $85.4 million acquisition of Orchid would have an anticompetitive impact in the market for
paternity testing services used by government agencies. The divestiture of Orchid’s paternity testing
company to a third testing company, DNA Diagnostics Center, resolved the Commission’s charges that the
acquisition was anticompetitive by restoring a competitor in the market.
See
www.ftc.gov/os/caselist/1110155/index.shtm.
16
DAF/COMP/AR(2013)10
68.
Graco/Illinois Tool Works. On December 15, 2011, the FTC challenged Graco Inc.’s proposed
$650 million acquisition of ITW Finishing LLC from Illinois Tool Works Inc., Graco’s largest competitor.
The Commission alleged that the transaction would harm competition in the market for equipment used to
apply paints and other liquid finishes to a variety of manufactured goods, such as cars, wood cabinets, and
major appliances. The Commission issued an administrative complaint and sought a preliminary
injunction in the U.S. District Court for the District of Columbia to halt the transaction pending resolution
of the administrative litigation. In March 2012, the Commission withdrew the matter from litigation to
consider a proposed consent agreement. The Commission resolved the matter through entry of a consent
order requiring Graco to hold separate and divest the worldwide liquid finishing equipment of Illinois Tool
Works, Inc. and ITW Finishing. See www.ftc.gov/os/caselist/1110169/index.shtm.
69.
OSF Healthcare System/Rockford Health System. On November 18, 2011, the FTC filed an
administrative complaint challenging OSF Healthcare System’s proposed acquisition of Rockford Health
System, alleging that the acquisition would substantially reduce competition among hospitals and primary
care physicians in Rockford, Illinois, and significantly harm local businesses and patients. The FTC filed a
separate complaint in federal district court seeking an order to halt the transaction temporarily to preserve
competition for Rockford area residents pending the FTC’s administrative proceeding and any subsequent
appeals. On April 5, 2012, the court granted the FTC’s request for a preliminary injunction, pending a full
administrative trial on the merits. OSF Healthcare subsequently abandoned the proposed transaction, and
the FTC dismissed the complaint. See www.ftc.gov/os/caselist/1110102/index.shtm.
70.
Healthcare Technology Holdings/SDI Health LLC. On October 28, 2011, the FTC issued a
complaint challenging Healthcare Technology Holdings, Inc.’s proposed acquisition of SDI Health LLC.
The Commission alleged that the acquisition would greatly reduce competition and increase prices in the
promotional and medical audit markets, which are highly concentrated. To resolve these competitive
concerns and restore the competition that would be lost with the acquisition, the Commission issued a
consent order requiring the sale of SDI’s promotional audit and medical audit businesses to an FTCapproved buyer. See www.ftc.gov/os/caselist/1110097/index.shtm.
71.
Teva/Cephalon. On October 7, 2011, the Commission issued a complaint that Teva
Pharmaceutical Industries, Ltd.’s proposed $6.8 billion acquisition of Cephalon, Inc. would reduce the
number of generic versions of Actiq, a cancer pain drug, from three to two, and lessen competition in the
relevant market. The Commission also alleged that the acquisition would eliminate potential competition
between Teva and Cephalon and reduce the number of generic competitors in the future for Amrix, a
muscle relaxant. The Commission’s consent order required Teva to sell its rights and assets related to the
two drugs to Par Pharmaceuticals, Inc. Teva also agreed to enter into a supply agreement to allow Par to
sell a generic version of Cephalon’s wakefulness drug, Provigil, to resolve the Commission’s concerns that
the merger would limit generic suppliers in that market. See www.ftc.gov/os/caselist/1110166/index.shtm.
4.2.2
DOJ Public Merger Investigations and Challenges
72.
The Division challenges proposed and consummated mergers in US federal district court. The
court determines whether to prohibit the transactions. During fiscal year 2012, the Division challenged
eight mergers in district court, including the proposed merger of NYSE Euronext and Deutsche Börse AG,
which was subsequently abandoned by the parties. In addition, due to expressed Division concerns, six
transactions were abandoned, two transactions were restructured, and three transactions were not
challenged when parties agreed to modify their conduct. The Division’s challenges to mergers frequently
result in conditions that resolve anticipated anti-competitive harm and allow the merger to proceed. Cases
filed in court may be settled by a judicial consent order allowing the parties to consummate the transaction
subject to appropriate conditions.
17
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73.
3M/Avery Dennison. On September 4, 2012, the Division announced that 3M Co. abandoned its
plan to acquire Avery Dennison Corp.’s Office and Consumer Products Group after the Division informed
the companies that it would file a civil antitrust lawsuit to block the deal. The Division said that the
proposed acquisition would have substantially lessened competition in the sale of labels and sticky notes,
resulting in higher prices and reduced innovation for products that millions of American consumers use
every day. See www.justice.gov/atr/public/press_releases/2012/286647.pdf.
74.
UTC/Goodrich. In U.S. v. United Technologies Corporation and Goodrich Corporation, the
Division challenged United Technologies Corporation’s (“UTC”) proposed $18.4 billion acquisition of
Goodrich Corporation; the acquisition was the largest merger in the history of the aircraft industry.
According to the complaint, filed on July 26, 2012, the acquisition, as originally proposed, would have
lessened competition substantially in the worldwide markets for the development, manufacture, and sale of
large main engine generators, aircraft turbine engines, and engine control systems for large aircraft turbine
engines. Aircraft main engine generators, which are used to produce the electrical power in
communication and navigation equipment, environmental control systems, interior and exterior lighting
and other aircraft systems, are complex mechanical devices that are difficult to produce, and for which no
substitutes exist. The proposed acquisition would have combined the only two significant suppliers of
large main engine generators for aircraft in the world. Furthermore, Goodrich’s engine control systems
business supplied critical components to several of UTC’s leading competitors for aircraft turbine engines.
In addition, as part of the proposed acquisition, UTC, one of the three leading suppliers of engine control
systems for large aircraft turbine engines, would acquire Goodrich’s 50 percent share in a joint venture that
formed one of the other two producers of such engine control systems. To resolve these competitive
concerns, the Division filed a proposed settlement simultaneously with the complaint. The settlement,
approved by the court on May 29, 2013, required UTC to divest Goodrich’s business that designs,
develops, and manufactures large main engine generators and engine control systems. It also required
UTC to divest Goodrich’s shares in the joint venture that manufactures engine control systems. The
Division, the European Commission, and the Canadian Competition Bureau cooperated closely throughout
the course of their respective investigations. The Division also held discussions with other competition
agencies, including the Federal Competition Commission in Mexico and the Administrative Council for
Economic Defense in Brazil. See www.justice.gov/atr/public/press_releases/2012/285420.pdf.
75.
Standard Essential Patents. The Division announced on February 13, 2012, the closing of its
investigations into Google Inc.’s acquisition of Motorola Mobility Holdings Inc., the acquisitions of certain
Nortel Networks Corporation patents by Apple Inc., Microsoft Corp. and Research in Motion Ltd., and
Apple’s acquisition of certain Novell Inc. patents. In all of these transactions, the Division conducted an
in-depth analysis into the potential ability and incentives of the acquiring firms to use the patents they
proposed acquiring to foreclose competitors. In particular, the Division focused on standard essential
patents (“SEPs”) that Motorola Mobility and Nortel had committed to license to industry participants
through their participation in standard-setting organizations. After a thorough review of the proposed
transactions, the Division determined that each acquisition was unlikely to substantially lessen competition
and to significantly change existing market dynamics. The Division’s concern about the potential
anticompetitive use of SEPs was lessened by the clear commitments by Apple and Microsoft to license
SEPs on fair, reasonable, and non-discriminatory terms, as well as their commitments not to seek
injunctions in disputes involving SEPs. Google’s commitments were more ambiguous and did not provide
the same direct confirmation of its SEP licensing policies. The Division said that it will continue to
monitor the use of SEPs in the wireless device industry and will not hesitate to take appropriate
enforcement action to stop any anticompetitive use of SEP rights. During the course of its investigation of
the Google/Motorola Mobility transaction, the Division cooperated closely with the European Commission
and had discussions with the Australian Competition and Consumer Commission, Canadian Competition
Bureau, Israeli Antitrust Authority, and the Korean Fair Trade Commission. With regard to the
investigations relating to the Nortel patent assets, the Division worked closely with the states of New York
18
DAF/COMP/AR(2013)10
and
California
and
with
the
Canadian
www.justice.gov/atr/public/press_releases/2012/280190.pdf.
Competition
Bureau.
See
76.
International Paper/Temple Inland. In U.S. v. International Paper Company and TempleInland Inc., the Division challenged the proposed $4.3 billion merger between International Paper
Company and Temple-Inland Inc. The complaint, filed on February 10, 2012, alleged that the transaction,
as originally proposed, would have substantially lessened competition in the production and sale of
containerboard, the type of paper used to make corrugated boxes, in the United States. Corrugated boxes
made from containerboard are used to ship more than 90 percent of all goods in the United States.
According to the complaint, International Paper and Temple-Inland are the largest and third-largest
producers, respectively, of containerboard in North America. To resolve these competitive concerns, the
Division filed a proposed settlement simultaneously with the complaint. The settlement required the
companies to divest three containerboard mills. The court approved the settlement on May 3, 2012. See
www.justice.gov/atr/public/press_releases/2012/280125.pdf.
77.
Deutsche Börse/NYSE Euronext. The Division announced on December 22, 2011, that it
would require Deutsche Börse AG to direct a subsidiary to sell its 31.5 percent stake in Direct Edge
Holdings LLC and agree to other restrictions in order for Deutsche Börse to proceed with its planned $9
billion merger with NYSE Euronext, one of the two largest and most prestigious stock exchange operators
in the United States. Direct Edge is the fourth-largest stock exchange operator in the U.S. The Division
said that the transaction, as originally proposed, would have substantially lessened competition for
displayed equities trading services, listing services for exchange-traded funds, and real-time proprietary
equity data products in the United States. The Division cooperated closely with the European Commission
on their respective investigations of the transaction. In February 2012, the European Commission
prohibited the merger; the differing conclusions of the two agencies resulted from differences in the
markets in the respective jurisdictions. The parties subsequently abandoned the transaction, and the
Division
withdrew
the
complaint
and
proposed
settlement.
See
www.justice.gov/atr/public/press_releases/2011/278537.pdf.
78.
Exelon/Constellation Energy. In U.S. v. Exelon Corporation and Constellation Energy Group,
Inc., the Division challenged the proposed $7.9 billion merger of Exelon Corporation and Constellation
Energy Group Inc. The complaint, filed on December 21, 2011, alleged that the transaction, as originally
proposed, likely would have substantially lessened competition for wholesale electricity, ultimately
increasing electricity prices for millions of consumers in the mid-Atlantic region of the country. To
resolve these competitive concerns, the Division filed a proposed settlement simultaneously with the
complaint. The settlement required the merged firm to divest three electricity generating plants in
Maryland, which in total provide more than 2,600 megawatts of generating capacity. The court approved
the settlement on May 23, 2012. See www.justice.gov/atr/public/press_releases/2011/278473.pdf.
79.
Google/Admeld. On December 2, 2011, the Division announced the closing of its investigation
into Google Inc.’s proposed acquisition of Admeld Inc. After a thorough review of the evidence, the
Division concluded that the transaction was not likely to substantially lessen competition in the sale of
display advertising. The Division’s investigation focused on the potential effect of the proposed
transaction on competition in the display advertising industry. The investigation determined that web
publishers often rely on multiple display advertising platforms and can move business among them in
response to changes in price or the quality of ad placements. Given Google’s significant presence in
search, the Division also carefully evaluated whether Google’s acquisition of Admeld would enable
Google to extend its market power in the Internet search industry to online display advertising through
anticompetitive means. The Division said it will continue to monitor transactions affecting evolving
markets such as display and other forms of online advertising, as well as search, to ensure they do not
inhibit competition or innovation. See www.justice.gov/atr/public/press_releases/2011/277935.pdf.
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DAF/COMP/AR(2013)10
5.
International antitrust cooperation and outreach
5.1
International Antitrust Cooperation Developments
80.
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 International Competition
Network (“ICN”), the Competition Committee of the Organization for Economic Cooperation and
Development (“OECD”), the United Nations Conference on Trade and Development (“UNCTAD”), and
the Asia-Pacific Economic Cooperation (“APEC”).
81.
On September 27, 2012, the Agencies signed an antitrust Memorandum of Understanding
(“MOU”) with India’s Ministry of Corporate Affairs and the Competition Commission of India. The
agreement contains provisions for increased communication and cooperation on policy and enforcement
matters and technical cooperation, and is subject to confidentiality protections. It also contemplates
periodic meetings among officials to discuss policy and enforcement developments.
See
www.ftc.gov/opa/2012/09/indiamou.shtm.
82.
On September 24-25, 2012, the Agencies and the three Chinese anti-monopoly agencies – the
Ministry of Commerce (“MOFCOM”), the National Development and Reform Commission , and the State
Administration for Industry and Commerce – held the first Joint Dialogue on competition policy in
Washington, DC. The high-level meetings covered a range of policy and technical subjects, including
promoting competition in a global economy and various aspects of civil and criminal enforcement. As
previously reported, the agencies of the two countries signed an antitrust MOU on July 27, 2011, to
promote communication and cooperation. See www.ftc.gov/opa/2012/09/chinamou.shtm.
83.
On November 29, 2011, the Agencies and MOFCOM met in Washington, DC, to discuss issues
of common interest in antitrust merger enforcement. This was the first high-level MOFCOM visit to the
Agencies since the signing of the MOU in July 2011. The agencies discussed recent antitrust enforcement
and policy developments, the role of antitrust enforcement in times of economic downturn, and
cooperation among the three agencies in merger investigations. The three agencies developed further
guidance for cooperation on investigations when one of the U.S. antitrust agencies and MOFCOM are
reviewing
the
same
merger.
The
guidance
is
available
at
www.justice.gov/atr/public/international/docs/277772.pdf.
84.
On December 19, 2011, the heads of the antitrust agencies of the United States, Canada, and
Mexico participated in a trilateral meeting to reaffirm their mutual commitment to effective enforcement
cooperation. The discussions covered a wide range of enforcement and policy issues, including updates on
merger policy and enforcement in the three jurisdictions and the sharing of recent experience in areas of
mutual enforcement interest.
85.
On October 14, 2011, the Agencies and the European Commission’s DG Competition issued
revised Best Practices on Cooperation in Merger Investigations and also celebrated the 20th anniversary of
the US-EU antitrust cooperation agreement. The Best Practices, originally issued in 2002, were revised in
light of the Agencies’ practical experience and provide an advisory framework for cooperation when a U.S.
Agency and DG Competition review the same merger. The main purposes of issuing the revised Best
Practices were (1) to be transparent about the Agencies’ cooperation – including when and what they
communicate with one another and their aim at compatible outcomes and (2) to suggest how merging
parties and third parties can facilitate coordination and resolution of those reviews. In addition, the Best
Practices address the complexity of coordinating merger review timetables between the authorities and
emphasize the need for coordination among the agencies at key stages of their investigations, including the
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DAF/COMP/AR(2013)10
final stage when agencies consider potential remedies to preserve competition. The Best Practices also
recognize that more authorities have become more engaged in the review process, requiring coordination
with a larger number of agencies.
The revised Best Practices are available at
www.ftc.gov/os/2011/10/111014eumerger.pdf; www.justice.gov/atr/public/international/docs/276276.pdf.
86.
During FY 2012, the Agencies cooperated on merger reviews with many competition agencies
around the world, including those of Australia, Brazil, Canada, China, Colombia, the European Union,
France, Germany, Japan, Mexico, New Zealand, Singapore, South Africa, Turkey, and the United
Kingdom. In some instances, cooperation with these authorities was extensive.
87.
The FTC had over 50 substantive contacts in merger and non-merger cases and cooperated on 23
merger matters (of which 15 were completed within FY 2012) and three conduct investigations. As an
example of international cooperation, the FTC engaged in substantive cooperation with ten non-U.S.
antitrust agencies, including newer authorities, reviewing Western Digital’s proposed acquisition of
Hitachi. The cooperating agencies included those in Australia, Canada, China, the European Union, Japan,
Korea, Mexico, New Zealand, Singapore, and Turkey. 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 remedies.
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. Even in matters in which the effects vary among jurisdictions or procedural
requirements result in different albeit non-conflicting outcomes, Commission staff often cooperate
extensively with their international counterparts, as for example, in Vivendi/EMI, in which FTC staff
closely cooperated with the EC’s DG Competition in reaching its decision to allow the transaction to
proceed.
88.
In FY 2012, the Division cooperated with international counterparts on many civil non-merger,
merger, and cartel investigations. Among the Division’s most notable instances of international
cooperation were its e-book and UTC/Goodrich matters. In April 2012, the Antitrust Division filed a civil
lawsuit against Apple Inc. and five of the largest book publishers in the United States, alleging that they
conspired to increase the prices consumers pay for e-books. With waivers from the parties, the Division
cooperated closely with the European Commission throughout the course of their respective investigations,
with frequent contact between the investigative staffs and the senior officials of the two agencies. And, in
UTC/ Goodrich, also with party waivers, the Division worked closely with the EC and the Canadian
Competition Bureau throughout their investigations. Staff communicated through regularly scheduled
conferences, conducted joint interviews with third parties, and held joint pre-decisional meetings with the
parties via video conference. In total, the Division cooperated with international counterparts in roughly a
dozen merger investigations in FY 2012. The Division also coordinated and cooperated with competition
agencies in other jurisdictions in many ongoing international cartel investigations.
89.
In FY 2012, the Agencies continued to play leadership roles in the ICN, and continued to serve as
ICN Steering Group members. During this year, the ICN and OECD worked together to undertake a
comprehensive study on the state of international enforcement cooperation. The OECD team and the ICN
project team, led by the DOJ and the Turkish Competition Authority, worked closely to produce two
separate, but complementary, reports based on survey responses from 57 member agencies. The OECD
report addressed a wide range of topics, including competition agencies’ experiences engaging in
international enforcement cooperation and the limitations to effective cooperation. The ICN report focused
on ICN members’ views on the usefulness of existing ICN cooperation-related work, and on ICN
members’ needs and priorities for future ICN cooperation-related work.
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DAF/COMP/AR(2013)10
90.
During FY 2012, 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 EC’s DG Competition, which
produced reports on investigative tools and agency transparency practices. The FTC also participated in
the drafting of two chapters for the Competition Agency Practice Manual on knowledge management and
human resources management. Finally, the FTC heads the Curriculum Project, which produced new
modules on planning an investigation, competition advocacy within government, and challenges faced by
competition agencies in developing economies.
91.
During FY 2012, the Division served as co-chair of the ICN Cartel Working Group, together with
Germany’s Bundeskartellamt and the Japan Fair Trade Commission. As co-chair, the Division participated
in the drafting of a chapter for the Anti-Cartel Enforcement Manual on international cooperation and
information sharing, as well as a discussion call series on leniency. The Division also participated in the
2012 Cartel Workshop in Panama City, Panama.
5.2
Outreach
92.
In FY 2012, 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 foreign technical missions in 19 countries, including China, Colombia, Costa Rica,
Dominican Republic, India, Indonesia, Morocco, South Africa, and Vietnam. The FTC also conducted
judicial trainings in Mexico and Russia. The Division’s international technical assistance antitrust program
conducted 11 foreign technical missions in 8 countries. As part of U.S. efforts to assist China in
implementing its antitrust law, the Agencies held discussions with the Chinese antitrust agencies in the
United States and China. In June 2012, senior officials and staff from the Agencies participated in a
workshop in China on antitrust analysis of intellectual property-related matters. The Agencies are also
working with the Competition Commission of India (CCI) as it implements its 2002 Competition Act and
new merger regime. Since FY 2010, the FTC has conducted 11 capacity-building workshops for the CCI,
including three workshops in FY 2012; in FY 2012, the Division hosted senior CCI merger officials for a
week and organized a day of presentations for a delegation of senior CCI economists on economic
analysis. The Agencies also engaged in technical cooperation with their international counterparts in
Australia, China, Mexico, Peru, Poland, and South Africa.
93.
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,
subject to appropriate confidentiality protections through its International Fellows and Interns program. In
FY 2012, the FTC hosted 12 International Fellows and Interns from countries including Australia, Brazil,
Canada, Egypt, India, Lithuania, Mauritius, Turkey, and the UK. The FTC also sent staff on details lasting
several months in the competition agencies of Canada 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.
94.
One of the Division’s senior career officials spent two weeks visiting the EC’s DG Competition
in July 2012, and the Division hosted two senior managers, one from DG Competition and the other from
the Japan Fair Trade Commission, in Washington, D.C., in December 2012. The exchange was a second
round in the Division’s new Visiting International Enforcers Program (“VIEP”). Participants in the VIEP
are exposed to all aspects of the Division’s work, consistent with the Division’s confidentiality obligations,
and receive training from senior Division officials regarding the Division’s civil and criminal enforcement
programs. Participants also have the opportunity to participate in meetings with Division decision-makers,
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DAF/COMP/AR(2013)10
parties, and third parties, and are invited to provide training to the Division on a topic of their choice
related to their jurisdiction’s antitrust law.
95.
In FY 2012, 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. In October 2012, Deputy Assistant Attorney General Renata B. Hesse visited the WIPO secretariat
in Switzerland as part of this project. DAAG Hesse also spoke at the International Telecommunications
Union on standard-setting, IP, and competition policy in the telecommunications context.
6.
Regulatory and Trade Policy Matters
6.1
Regulatory Policies
6.1.1
DOJ Activities: Federal and State Regulatory Matters
96.
In January 2013, the Division and the U.S. Patent & Trademark Office (“PTO”) issued a policy
statement recommending that the U.S. International Trade Commission (“ITC”) undertake fact-based,
case-specific decisions regarding the enforcement of a patent essential to a standard that is encumbered by
a commitment to license that patent on reasonable and non-discriminatory (“RAND”) or fair, reasonable,
and nondiscriminatory (“FRAND”) terms to those implementing the standard. The statement does not
encourage compulsory licensing of F/RAND-encumbered patents essential to a standard; it applies only to
voluntary standards development and commitments to license on F/RAND terms that were voluntarily
made by patent owners—which are the antithesis of mandatory nationalized standards. In the Division’s
view, an ITC order excluding certain products based on infringement of F/RAND-encumbered patents
essential to a standard may be in the public interest only in limited circumstances, such as when a potential
licensee is not subject to the jurisdiction of a court that can award damages, refuses to engage in a
negotiation, or engages in a constructive refusal to negotiate (such as insisting on terms clearly outside of
F/RAND), or is not subject to a court that could award damages. See U.S. Dep’t of Justice & U.S. Patent
and Trademark Office, Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary
F/RAND Commitments (Jan. 2013), www.justice.gov/atr/public/guidelines/290994.pdf.
97.
On December 22, 2011, the Division submitted comments to the Federal Maritime Commission
(“FMC”), urging the FMC to carefully consider, and to order appropriate limiting conditions to, proposed
amendments seeking antitrust immunity for a pool agreement among ocean carriers and non-regulated
transportation firms involving common usage of “chassis” (metal trailer frames used for over-the-road
transport of shipping containers). Noting that the Department “has long taken the position that the general
antitrust exemption for international ocean shipping carrier agreements is no longer justified,” the Division
observed that the proposed amendments expanded the original purpose of the pool agreement to activities
“further removed and possibly independent from actual ocean transportation.”
See
www.justice.gov/atr/public/comments/278992.pdf.
6.1.2
FTC Staff Activities: Federal and State Regulatory Matters
98.
Health Care, Health Professions. On September 7, 2012, at the request of West Virginia State
Senator Daniel Foster, FTC staff provided testimony to a legislative panel on the potential benefits to West
Virginia health care consumers that could come from making it simpler for Advanced Practice Registered
Nurses to prescribe medications. See www.ftc.gov/opa/2012/09/wva.shtm.
99.
Utilities, Electricity. On September 6, 2012, the FTC submitted comments to the U.S. Federal
Energy Regulatory Commission (“FERC”) recommending ways to lower the barriers faced by companies
seeking to enter regional and local markets to sell services that maintain or enhance the reliability of
electricity generation, transmission, and distribution. In its comments, the FTC discussed ways to promote
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DAF/COMP/AR(2013)10
more efficient pricing of these services in areas beyond those with organized wholesale electricity markets.
The FTC also encouraged FERC to enrich its geographic market analysis by following the analysis set
forth in the 2010 Horizontal Merger Guidelines. See www.ftc.gov/opa/2012/09/ferc.shtm.
100.
Utilities, Electricity. On June 14, 2012, the FTC submitted comments to a FERC workshop on
the allocation of capacity on new merchant transmission projects. The workshop sought to identify
procedures to ensure non-discriminatory allocation of capacity on new transmission lines proposed by
merchant firms. Workshop participants considered whether the FERC could achieve open access and non
discrimination by requiring public notice of a new transmission line, followed by private, bilateral
negotiations over access. As an alternative, participants considered whether the FERC should use an
auction-like “open season” to allocate at least some of a line’s capacity on pre-announced terms. In its
comments, the FTC noted that neither option would prevent firms from exercising market power. The
Commission suggested that the FERC consider setting up a process for reviewing proposals to address
concerns and possibly require modifications to plans that are flawed, or reject those that are not in the
public interest. See www.ftc.gov/opa/2012/06/ferc.shtm.
101.
International Trade and Intellectual Policy. On June 6, 2012, at the request of the U.S.
International Trade Commission (“ITC”), the FTC commented on the propriety of granting an exclusion
order in favor of a standard essential patent (“SEP”) holder that has committed to license on reasonable and
non-discriminatory (“RAND”) terms. The FTC expressed concern that a patentee can make a RAND
commitment as part of the standard setting process, and then seek an exclusion order for infringement of
the RAND-encumbered SEP as a way of securing royalties that may be inconsistent with that RAND
commitment. The FTC further stated that the ITC has a range of remedies available to it to give effect to
its statutory obligation to consider “competitive conditions in the United States economy … and United
States consumers[,]” and to refrain from imposing Section 337 remedies in conflict with the public interest.
For example, the ITC could find that Section 337’s public interest factors support denial of an exclusion
order unless the holder of the RAND-encumbered SEP has made a reasonable royalty offer. Alternatively,
the ITC could delay the effective date of its Section 337 remedies until the parties mediate in good faith for
damages for past infringement and/or an ongoing royalty for future licensed use, with the parties facing the
respective risks that the exclusion order will (a) eventually go into effect if the implementer refuses a
reasonable offer, or (b) be vacated if the ITC finds that the patentee has refused to accept a reasonable
offer. See www.ftc.gov/os/2012/06/1206ftcgamingconsole.pdf.
102.
Dentistry. On May 25, 2012, at the request of a member of the North Carolina House of
Representatives, the FTC commented on proposed legislation that would impose significant restrictions on
the business organization of dental practices in North Carolina. FTC staff expressed concern that the bill
may deny consumers of dental services the benefits of competition spurred by the efficiencies that Dental
Service Organizations (“DSOs”) can offer, including the potential for lower prices, improved access to
care, and greater choice. FTC staff urged the legislature to consider the potential anti-competitive effects of
the legislation – including higher prices, reduced access, and decreased choices for consumers – and to
reject the House bill and its companion Senate bill. See www.ftc.gov/opa/2012/05/ncdentists.shtm.
103.
Veterinarians. On April 26, 2012, at the request of a member of the Alabama House of
Representatives, the Commission filed comments regarding an Alabama House bill that would allow
veterinarians to be employed by a limited services 501(c)(3) nonprofit facility that performs only spay and
neuter surgeries and vaccinations given at the time of surgery, designates a licensed veterinarian to
supervise veterinary medical practice, and has received an approved premises permit from the Board of
Veterinary Medical Examiners. FTC staff commented that the bill is likely to benefit consumers by
increasing consumer access to, and choices among, spay and neuter services for their pets, and thus
supports the passage of the bill. See www.ftc.gov/opa/2012/04/alabamavets.shtm.
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104.
Health Care, Nursing. On April 20, 2012, FTC staff responded to a request from two members
of the Louisiana House of Representatives regarding a bill that would remove the collaborative practice
requirement for Advanced Practice Registered Nurses (“APRNs”) who practice in medically underserved
areas or treat medically underserved populations. FTC staff recommended that, given the potential
benefits of eliminating unwarranted impediments to APRN practice, the Louisiana legislature should seek
to ensure that statutory limits on APRNs are no stricter than patient protection requires. In its comments,
the FTC concluded that the bill appears to be a procompetitive improvement in the law that would benefit
Louisiana health care consumers. See www.ftc.gov/opa/2012/04/louisiana.shtm.
105.
Health Care, Health Professions. On March 27, 2012, the Commission submitted comments to
a Missouri State Representative regarding a proposed bill to regulate providers of pain management
services, advising that the legislature should carefully investigate patient safety issues and ensure that any
statutory limits on certified registered nurse anesthetists (“CRNAs”) are no stricter than patient safety
requires. Staff cautioned that by restricting the provision of services by CRNAs, the proposed bill could
exacerbate problems of access to care, especially for rural and other underserved populations. Staff further
cautioned that the bill could also impede price and non-price competition among providers of pain
management
services
and
increase
costs
to
Missouri
citizens.
See
www.ftc.gov/opa/2012/03/missouripain.shtm.
106.
Health Care, Health Professions. On March 26, 2012, staff advised a member of the Kentucky
State Senate regarding a proposed bill, suggesting that the legislature carefully investigate patient safety
issues and ensure that any statutory limits on APRNs are no stricter than patient safety requires.
Eliminating the currently required collaborative prescribing agreement requirement may improve access
and consumer choice for primary care services, especially for rural and other underserved populations, and
may also encourage beneficial price competition that can help contain health care costs. The Commission
advised that the bill appears to be a procompetitive improvement in the law that would benefit Kentucky
health care consumers. See www.ftc.gov/opa/2012/03/kentucky.shtm.
107.
Dentistry. On November 16, 2011, the Commission responded to a request for comments from
the Executive Secretary of the Maine Board of Dental Examiners. FTC staff stated that the dental
hygienist rules proposed by the Board, designed to implement a pilot project to test expanded access to
dental care in underserved areas of Maine, contain restrictions that could undermine the project’s purpose
and deny consumers the benefits of competition among providers of dental health services. The FTC
further recommended that the Board not impose the proposed restrictions.
See
www.ftc.gov/opa/2011/11/mainedental.shtm.
108.
Health Care, Physician Collective Bargaining. On October 20, 2011, FTC staff responded to a
request from a New York State Senator to comment on a proposed bill. The bill, if enacted, would
authorize independent health care providers to collectively negotiate a variety of contract provisions with
certain health plans, including fees and other non-fee-related matters. In its comments, the FTC stated that
New York consumers would likely face higher health care costs and decreased access to health care
services under the proposed legislation, beyond what the antitrust laws permit. FTC staff recommended
that the New York State Assembly reject the bill. See www.ftc.gov/opa/2011/10/nyhealthcare.shtm.
6.1.3
DOJ and FTC Trade Policy Activities
109.
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. The Division
also works with other Department components (including the Civil, Criminal, and Environmental and
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Natural Resources Divisions) on international trade and investment issues that affect those components or
the Department as a whole.
110.
The Agencies also participate in negotiations and working groups related to regional and bilateral
trade agreements. The Division and the FTC participate in competition policy discussions associated with
APEC and the Trans-Pacific Partnership (“TPP”) negotiations.
7.
New Studies Related to Antitrust Policy
7.1
Joint Conferences and Reports
111.
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
www.ftc.gov/opp/workshops/pae.
112.
Workshop on Most-Favored-Nation Clauses and Antitrust Enforcement and Policy. On
September 10, 2012, the Agencies held a joint public workshop in Washington, DC on most-favored
nation clauses (“MFNs”). The workshop provided a forum to explore the use of MFN clauses and the
implications for antitrust enforcement and policy. The workshop consisted of a series of panels examining,
among other topics, the legal treatment of MFNs, economic theories concerning MFNs and why they are
used, and industry experiences with MFNs. Additional information on the workshop is available at
www.ftc.gov/opa/2012/08/mfn.shtm.
7.2
FTC Conferences, Reports, and Economic Working Papers
7.2.1
Conferences and Workshops
113.
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 effect 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
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
114.
The FTC’s Bureau of Economics issued the following working papers during FY 2012. The
papers are available at www.ftc.gov/be/econwork.shtm.
•
David J. Balan, George Deltas, Better Product at Same Cost, Lower Sales and Lower Welfare,
June 2012
•
Nathan Wilson, Local Market Structure and Strategic Organizational Form Choices, March 2012
•
Nathan E. Wilson, The Impact of Vertical Contracting on Firm Behavior: Evidence from
Gasoline Stations, January 2012
26
DAF/COMP/AR(2013)10
•
Nathan E. Wilson, Branding, Cannibalization, and Spatial Preemption: An Application to the
Hotel Industry, November 2011
7.3
DOJ Conferences, Reports, and Economic Working Papers
7.3.1
DOJ Conferences and Reports
115.
Competition and Agriculture Report. In May 2012, the Department issued a report entitled,
“Competition and Agriculture: Voices From the Workshops on Agriculture and Antitrust Enforcement in
Our 21st Century Economy and the Way Forward,” that shared with agriculture and antitrust communities
what the Division learned at a series of five agriculture competition workshops held jointly with the U.S.
Department of Agriculture during 2010. The workshop sessions covered a range of agricultural
commodities including row crops, dairy products, hogs, cattle, and poultry. The series of one-day
conferences held at venues around the United States explored viewpoints across a wide spectrum including
farmers, processors, retailers, government officials and academics. The report delineates the major issues
discussed at the workshops. One lesson of the workshops is that antitrust enforcement and competition
advocacy play a crucial role in fostering a healthy and competitive agriculture sector. But it is also clear
that many of the challenges facing the agriculture sector today fall outside the purview of the antitrust laws
and will require public and private cooperation to find solutions. The report is available at
www.justice.gov/atr/public/reports/index.html. Transcripts and video of the workshops as well as links to
more than 18,000 public comments are available at www.justice.gov/atr/public/workshops/ag2010/.
7.3.2
DOJ Economic Analysis Group Discussion Papers
116.
The DOJ Economic Analysis Group issued the following papers during FY 2012. The papers are
available at www.usdoj.gov/atr/public/eag/discussion_papers.htm.
•
Anthony Creane and Thomas D. Jeitschko, Endogenous Entry in Markets with Unobserved
Quality, August 2012
•
Thomas D. Jeitschko and Nanyun Zhang, Adverse Effects of Patent Pooling on Product
Development and Commercialization, July 2012
•
Anthony Creane and Thomas D. Jeitschko, Shipping the Good Apples Out Under Asymmetric
Information, April 2012
•
William W. Nye, Some New Evidence About the Effects of U.S. Antidumping Orders and Their
Administrative Reviews on the Prices of Covered Imports, April 2012
•
Yan Li and Russell Pittman, The Proposed Merger of AT&T and T-Mobile: Are There
Unexhausted Scale Economies in U.S. Mobile Telephony?, April 2012
•
Charles J. Romeo, Incorporating Prior Information into a GMM Objective for Mixed Logit
Demand Systems, April 2012
27
DAF/COMP/AR(2013)10
APPENDICES
Department of Justice: Fiscal Year 2012 FTE7 and Resources by Enforcement Activity
FTE
Amount ($ in thousands)
Criminal Enforcement
282
$65,667
Civil Enforcement
423
$98,500
Total
705
$164,167
Federal Trade Commission: Fiscal Year 2012 Competition Mission
FTE and Dollars by Program, Bureau & Office
FTE
Amount ($ in thousands)
Total Maintain Competition
Mission
Bureau of Competition
271.0
49,962.9
Bureau of Economics
73.7
12,146.2
Regional Offices
25.1
4,266.5
Mission Support
136.2
49,287.0
Premerger Notification
Bureau of Competition
Bureau of Economics
Regional Offices
7
Merger
&
Joint
Enforcement
Bureau of Competition
Bureau of Economics
Regional Offices
Venture
Merger
&
Joint
Compliance
Bureau of Competition
Bureau of Economics
Regional Offices
Venture
21.7
0.1
0.4
3,348.3
16.2
64.8
130.1
42.5
7.3
22,051.9
6,915.0
1,190.3
1.6
-----
246.8
-----
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).
28
DAF/COMP/AR(2013)10
Nonmerger Enforcement
Bureau of Competition
Bureau of Economics
Regional Offices
105.3
20.4
12.9
18,486.2
3,365.5
2,116.7
Nonmerger Compliance
Bureau of Competition
Bureau of Economics
Regional Offices
0.3
-----
46.3
-----
FTE
Amount ($ in thousands)
Antitrust Policy Analysis
Bureau of Competition
Bureau of Economics
Regional Offices
0.3
6.6
---
46.3
1,072.4
--
Other Direct
Bureau of Competition
Bureau of Economics
Regional Offices
11.7
4.1
4.5
2,737.1
777.1
894.7
Support
136.2
49,287.0
29
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.