Amicus Curiae Brief — AMG Capital Management, LLC, et al., Petitioners v. Federal Trade Commission

No. 19-508

In the Supreme Court of the United States

AMG CAPITAL MANAGEMENT, LLC, ET AL.,

Petitioners,

v.

FEDERAL TRADE COMMISSION,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals for the Ninth Circuit

BRIEF OF AMERICAN ANTITRUST INSTITUTE AS

AMICUS CURIAE IN SUPPORT OF THE RESPONDENT

MATTHEW W.H. WESSLER

GUPTA WESSLER PLLC

1900 L Street NW Suite 312

Washington, DC 20036

(202) 888-1741

JENNIFER D. BENNETT

RANDY M. STUTZ

AMERICAN ANTITRUST

INSTITUTE

1025 Connecticut Ave., NW

Suite 1000

Washington, DC 20036

(202) 905-5420

jennifer@guptawessler.com

Counsel of Record

GUPTA WESSLER PLLC

100 Pine Street Suite 1250

San Francisco, CA 94111

(415) 573-0336

Counsel for Amicus Curiae

December 7, 2020

-iTABLE OF CONTENTS

Table of Authorities ............................................................ ii

Interest of Amicus Curiae ................................................. 1

Introduction & Summary of Argument ............................ 2

Argument ............................................................................. 4

I.

Congress has repeatedly and knowingly

chosen to ratify, rather than prohibit, the

Federal Trade Commission’s use of Section

13(b) to seek disgorgement. ................................ 4

II.

Reading Section 13(b) to silently prohibit

courts from exercising their equitable

powers would undermine the statute. ............... 9

A.

Disgorgement is an essential tool for

preventing unfair methods of

competition. ................................................ 10

B.

The Federal Trade Commission

depends on courts’ traditional

equitable authority to fashion effective

preliminary relief. ...................................... 21

Conclusion .......................................................................... 25

-iiTABLE OF AUTHORITIES

Cases

American Express Co. v. Italian Colors

Restaurant,

570 U.S. 228 (2013) ....................................................... 14

Apple Inc. v. Pepper,

139 S. Ct. 1514 (2019) ................................................... 14

California v. American Stores Co.,

495 U.S. 271 (1990) ................................................. 10, 21

California v. ARC America Corp.,

490 U.S. 93 (1989) ......................................................... 15

Deckert v. Independent Shares Corp.,

311 U.S. 282 (1940) ....................................................... 24

Federal Trade Commission v. Febre,

128 F.3d 530 (7th Cir. 1997) ........................................... 6

Federal Trade Commission v. Security Rare Coin

& Bullion Corp.,

931 F.2d 1312 (8th Cir. 1991) ......................................... 6

Federal Trade Commission v. Amy Travel

Service, Inc.,

875 F.2d 564 (7th Cir. 1989) ........................................... 6

Federal Trade Commission v. Dean Foods Co.,

384 U.S. 597 (1966) ....................................................... 21

Federal Trade Commission v. Elders Grain,

Inc.,

868 F.2d 901 (7th Cir. 1989) ............................. 22, 23, 24

Federal Trade Commission v. Freecom

Communications, Inc.,

401 F.3d 1192 (10th Cir. 2005) ....................................... 6

-iii-

Federal Trade Commission v. Gem

Merchandising Corp.,

87 F.3d 466 (11th Cir. 1996) ........................................... 6

Federal Trade Commission v. H.N. Singer, Inc.,

668 F.2d 1107 (9th Cir. 1982) ......................................... 6

Federal Trade Commission v. Illinois Cereal

Mills, Inc.,

691 F. Supp. 1131 (N.D. Ill. 1988) ............................... 22

Federal Trade Commission v. Mylan

Laboratories, Inc.,

62 F. Supp. 2d 34 (D.D.C. 1999) ............................ 10, 15

Federal Trade Commission v. Pantron I Corp.,

33 F.3d 1088 (9th Cir. 1994) ........................................... 6

Federal Trade Commission v. Surescripts, LLC,

424 F. Supp. 3d 92 (D.D.C. 2020) ................................ 19

Federal Trade Commission v. Weyerhaeuser, Co.,

665 F.2d 1072 (D.C. Cir. 1981) .................................... 23

Federal Trade Commission v. Whole Foods

Market., Inc.,

548 F.3d 1028 (D.C. Cir. 2008) .................................... 23

Federal Trade Commission v. Cephalon, Inc.,

100 F. Supp. 3d 433 (E.D. Pa. 2015) ..................... 11, 20

Federal Trade Commission v. U.S. Oil & Gas

Corp.,

748 F.2d 1431 (11th Cir. 1984) ................................. 6, 24

Ford Motor Co. v. United States,

405 U.S. 562 (1972) ......................................................... 9

Mitchell v. Robert DeMario Jewelry, Inc.,

361 U.S. 288 (1960) ................................................. 4, 5, 6

Porter v. Warner Holding Co.,

328 U.S. 395 (1946) ..................................................... 4, 5

-iv-

Stevens v. Gladding,

58 U.S. 447 (1854) ........................................................... 4

United States v. American Tobacco Co.,

221 U.S. 106 (1911) ......................................................... 9

Statutes & Legislative Materials

15 U.S.C. § 45(a)(2) ............................................................... 9

15 U.S.C. § 45(a)(4) ............................................................... 6

15 U.S.C. § 57b .................................................................... 17

Pub. L. No. 103-312 (1994)................................................... 6

Pub. L. No. 109-455 (2006)................................................... 6

Federal Trade Commission,

Annual Report to Congress (2018), available at

https://perma.cc/W2EU-TU29 ...................................... 7

Federal Trade Commission,

Prepared Statement, Before the

Subcommittee on Regulatory Reform,

Commercial and Antitrust Law of the House

Judiciary Committee (2015), available at

https://perma.cc/XJ25-HFEN ...................................... 7

FTC at 100: Views from the Academic Experts:

Hearing Before the Subcommittee on

Commerce, Manufacturing, and Trade of the

House Committee on Energy and Commerce,

113th Congress (2014) .................................................... 7

Oversight of Enforcement of the Antitrust Laws:

Hearing Before the Senate Subcommittee on

Antitrust, Business Rights and Competition

of the Senate Committee on the Judiciary,

107th Cong. (2002) .......................................................... 7

-vRobert Pitofsky, Prepared Statement of the

Federal Trade Commission, Before the House

Judiciary Committee (1999) ........................................ 12

S. Rep. No. 103-130 (1993) ................................................... 8

S. Rep. No. 93-151 (1973) ................................................... 18

The Antitrust Enforcement Agencies: The

Bureau of Competition of the Federal Trade

Commission and the Antitrust Division of the

Department of Justice: Hearing Before the

House Committee on the Judiciary, 106th

Cong. (2000)................................................................. 7, 8

Other Authorities

American Antitrust Institute,

Comments of American Antitrust Institute

Working Group on Remedies to Antitrust

Modernization Commission (June 17, 2005) .............. 16

Andrew I. Gavil,

Thinking Outside the Illinois Brick Box: A

Proposal for Reform, 76 Antitrust L.J. 167

(2009) ........................................................................ 14, 20

Antitrust Modernization Commission,

Report and Recommendations (April 2007) ................ 8

C. Scott Hemphill,

Paying for Delay: Pharmaceutical Patent

Settlement as a Regulatory Design Problem,

81 N.Y.U. L. Rev. 1553 (2006) ....................................... 2

Einer Elhauge,

Disgorgement as an Antitrust Remedy,

76 Antitrust L.J. 79 (2009) ........................................... 14

-viFederal Trade Commission,

FTC Reaches Record Financial Settlement to

Settle Charges of Price-fixing in Generic Drug

Market (Nov. 29, 2000) ................................................. 10

Federal Trade Commission,

Overview of FTC Actions in Health Care

Services and Products (June 2019) ....................... 12, 13

John George,

Hurdles ahead for Cephalon, Phila. Bus. J.

(Mar 20, 2006), https://perma.cc/3QAW-B3U9............ 2

John M. Connor & Robert H. Lande,

Not Treble Damages: Cartel Recoveries Are

Mostly Less Than Single Damages, 100 Iowa

L. Rev. 1997 (2015) ....................................................... 17

Jonathan B. Baker,

The Antitrust Paradigm: Restoring a

Competitive Economy (2019) ........................................ 2

Joseph P. Bauer,

The Stealth Assault on Antitrust

Enforcement: Raising the Barriers for

Antitrust Injury and Standing, 62 U. Pitt. L.

Rev. 437 (2001) ........................................................ 13, 16

Newberg on Class Actions § 20:12 (5th ed. 2011) ........... 16

Press Release, Federal Trade Commission,

FTC and NY Attorney General Charge Vyera

Pharmaceuticals, Martin Shkreli, and Other

Defendants with Anticompetitive Scheme to

Protect a List-Price Increase of More Than

4,000 Percent for Life-Saving Drug Daraprim

(Januar 27, 2020)..................................................... 15, 16

-viiPress Release, Federal Trade Commission,

FTC Settlement of Cephalon Pay for Delay

Case Ensures $1.2 Billion in Ill-Gotten Gains

Relinquished (May 28, 2015) ....................................... 11

Statement of Chairman Robert Pitofsky and

Commissioners Sheila F. Anthony &

Mozelle W. Thompson, Federal Trade

Commission v. Mylan Laboratories, Inc., FTC

File No. X990015 .......................................................... 20

Stephen Calkins,

Civil Monetary Remedies Available to the

Federal Government, Testimony to Antitrust

Modernization Committee (Nov. 30, 2005) .......... 12, 13

Thomas L. Greaney,

Chicago’s Procrustean Bed: Applying

Antitrust Law in Health Care, 71 Antitrust

L.J. 857 (2004) ............................................................... 12

-1INTEREST OF AMICUS CURIAE 1

The American Antitrust Institute (“AAI”) is an

independent non-profit organization devoted to promoting

competition that protects consumers, businesses, and

society. It serves the public through research, education,

and advocacy on the benefits of competition and the use of

antitrust enforcement as a vital component of national and

international competition policy. AAI enjoys the input of

an Advisory Board that consists of over 130 prominent

antitrust lawyers, law professors, economists, and

business leaders. See http://www.antitrustinstitute.org.

AAI submits this brief because the goals of U.S.

antitrust law will be significantly impaired if the Federal

Trade Commission is unable to prevent unfair methods of

competition by seeking disgorgement in appropriate

antitrust cases under Section 13(b) of the Federal Trade

Commission Act.

The parties have lodged blanket consent to file amicus briefs

with the clerk. No counsel for a party authored this brief in whole or

in part and no person other than amicus curiae and its counsel made

a monetary contribution to its preparation or submission. Individual

views of members of AAI’s Board of Directors or Advisory Board may

differ from AAI’s positions.

1

-2INTRODUCTION & SUMMARY OF ARGUMENT

This case is about deceptive practices: The Federal

Trade Commission sued AMG to put a stop to its

fraudulent lending scheme that bilked over a billion

dollars from unsuspecting borrowers. But the

interpretation of the Federal Trade Commission Act that

AMG asks this Court to adopt would undermine the

Commission’s ability not only to protect consumers from

unfair and deceptive practices but also to prevent

anticompetitive conduct.

There is little dispute that market power and

anticompetitive conduct pose a serious threat to the U.S.

economy—and they are on the rise. In many industries

now, only a few companies control the vast majority of

sales. And they work hard to keep competitors out

through a variety of creative (and illegal) maneuvers, from

paying competitors not to enter the market to threatening

customers not to do business with anyone else. 2

Antitrust violations are prevalent because they are

profitable. Take, for example, the pharmaceutical

industry. Drug companies can increase their revenue by

billions of dollars simply by illegally delaying or

foreclosing competition on a single drug. 3 Of course, those

For a discussion of the prevalence of anticompetitive conduct

and the threat posed by increasing market power, see Jonathan B.

Baker, The Antitrust Paradigm: Restoring a Competitive Economy

12–31 (2019).

2

See C. Scott Hemphill, Paying for Delay: Pharmaceutical Patent

Settlement as a Regulatory Design Problem, 81 N.Y.U. L. Rev. 1553,

1580 (2006); John George, Hurdles ahead for Cephalon, Phila. Bus. J.

3

(Mar.

20,

2006),

https://perma.cc/3QAW-B3U9

(quoting

pharmaceutical company CEO stating that delaying generic entry

gave company “$4 billion in sales”).

-3billions of dollars do not come from nowhere. They are

taken from patients and their insurance companies.

The Federal Trade Commission Act specifically

directs the Federal Trade Commission to prevent such

anticompetitive conduct. Yet, on AMG’s view, that same

statute prohibits courts from awarding the relief

necessary to enable the Commission to actually do so.

Equitable monetary relief is critical to the FTC’s ability to

accomplish its statutory mission. Illegal business

practices are not preventable if they are profitable.

In some instances, private enforcement of antitrust

statutes can recover ill-gotten gains and deter violations.

But in other cases, private litigation is insufficient or

absent entirely. If the FTC cannot seek disgorgement in

those cases, anticompetitive conduct will continue to pay.

And the Commission will be hard-pressed to prevent it.

This is not the only problem with AMG’s

interpretation. In AMG’s view, unless Section 13(b)

expressly mentions a specific equitable remedy, it is

categorically foreclosed. So, on that theory, courts are not

permitted to order an asset freeze while administrative

proceedings are ongoing. Nor can they order that

companies hold illegally-acquired assets separate from

the rest of their holdings until enforcement proceedings

are resolved.

In other words, as AMG would have it, the statute

designed to prevent anticompetitive conduct allows

antitrust violators to get away with antitrust violations—

as long as they can accomplish them fast enough—and to

keep the profits those violations generate.

If, for some reason, the FTC Act mandated these

absurd results, this Court would have no choice but to

abide by it. But the statute requires no such thing. To the

contrary, Section 13(b) authorizes courts to issue

-4injunctions—authority that for hundreds of years has

been understood to empower courts to exercise their full

equitable powers.

This is no accident. Congress knows how to limit

courts’ equitable power and chose not to do so in the FTC

Act. And Congress is well aware that because of its choice,

the Commission relies on Section 13(b) to seek

disgorgement. Yet it has made no effort to alter courts’

equitable power—despite having twice amended the

statute in other ways.

That’s because courts’ authority to exercise the full

panoply of equitable remedies is essential to the effective

enforcement of the statute. This Court should reject

AMG’s request to interpret the statute in a way that would

render it unable to achieve its goal.

ARGUMENT

I.

Congress has repeatedly and knowingly chosen to

ratify, rather than prohibit, the Federal Trade

Commission’s use of Section 13(b) to seek

disgorgement.

As the Commission’s brief thoroughly documents, it

has been clear for hundreds of years that the power to

issue an injunction includes the power to award

restorative monetary relief. See FTC Br. 16–24.

Beginning as far back as 1855, this Court repeatedly held

that statutes that authorize courts to “grant injunctions”

necessarily grant the authority to award equitable

monetary remedies. See, e.g., Stevens v. Gladding, 58 U.S.

447, 454 (1854); Porter v. Warner Holding Co., 328 U.S.

395, 397 (1946); Mitchell v. Robert DeMario Jewelry, Inc.,

361 U.S. 288, 292 (1960).

This is because “[n]othing is more clearly a part of the

subject matter of a suit for an injunction than the recovery

-5of that which has been illegally acquired and which has

given rise to the necessity for injunctive relief.” Porter,

328 U.S. at 399. And the authority to enjoin violations of a

statute, by definition, carries with it the authority to

exercise “all the inherent equitable powers of the District

Court . . . for the proper and complete exercise of that

jurisdiction.” Id. at 398; see also id. at 399 (“[W]here, as

here, the equitable jurisdiction of the court has properly

been invoked for injunctive purposes, the court has the

power to decide all relevant matters in dispute and to

award complete relief even though the decree includes

that which might be conferred by a court of law.”).

For years, Congress has relied on this well-established

understanding of what it means to authorize courts to

grant injunctions. Shortly after this Court’s decision in

Porter, for example, Congress added an exception to

courts’ jurisdiction “to restrain violations of” the Fair

Labor Standards Act. Mitchell, 361 U.S. at 289. Congress

provided that courts, acting under that grant of

jurisdiction, could not “order the payment to employees of

unpaid minimum wages or unpaid overtime compensation

or an additional equal amount as liquidated damages in

such action.” Id.

If Congress did not understand the authority to enjoin

statutory violations to encompass the authority to award

restorative monetary relief, no such exception would have

been necessary. The jurisdiction to enjoin statutory

violations would never include the authority to order

restitution of unpaid minimum wages in the first place.

And because Congress expressly prohibited only

restitution of unpaid minimum wages, this Court held that

the statute did not prohibit other forms of restitution, such

-6as restitution of wages lost because of unlawful discharge

or discrimination. See Mitchell, 361 U.S. at 288.

Put simply: When Congress wants to limit courts’

equitable authority, it says so. See id. It did not say so in

enacting Section 13(b) of the Federal Trade Commission

Act.

For decades, courts of appeal consistently honored

that choice, holding—as this Court had held for over a

century—that the statutory grant of an injunction

necessarily includes the authority of the court to exercise

its full equitable powers. 4 And for decades, the

Commission relied on this authority in appropriate cases

to seek disgorgement from wrongdoers who would

otherwise be able to keep the profits from their

misconduct.

During this time, Congress has twice amended the

statute. And twice it has decided not to limit courts’

equitable power under it. See Pub. L. No. 103-312, 108

Stat. 1691 (1994); Pub. L. No. 109-455, § 3, 120 Stat. 3372

(2006) (codified at 15 U.S.C. § 45(a)(4)).

This is not because Congress is unaware of how the

statute has been interpreted. To the contrary, the Federal

Trade Commission’s reliance on Section 13(b) to seek

disgorgement has been brought to Congress’s attention

See, e.g., F.T.C. v. Sec. Rare Coin & Bullion Corp., 931 F.2d

1312, 1314–15 (8th Cir. 1991); F.T.C. v. Amy Travel Serv., Inc., 875

F.2d 564, 571–72 (7th Cir. 1989); F.T.C. v. U.S. Oil & Gas Corp., 748

F.2d 1431, 1432, 1434 (11th Cir. 1984); F.T.C. v. H.N. Singer, Inc., 668

F.2d 1107, 1113 (9th Cir. 1982); F.T.C. v. Freecom Commc’ns, Inc.,

401 F.3d 1192, 1202 & n.6 (10th Cir. 2005); F.T.C. v. Febre, 128 F.3d

530, 534 (7th Cir. 1997); F.T.C. v. Pantron I Corp., 33 F.3d 1088, 1102

(9th Cir. 1994); F.T.C. v. Gem Merch. Corp., 87 F.3d 466, 469 (11th

Cir. 1996).

4

-7several times—including by the Chamber of Commerce,

which now argues that Congress couldn’t possibly have

intended this result. See, e.g., The Antitrust Enforcement

Agencies: The Bureau of Competition of the Federal

Trade Commission and the Antitrust Division of the

Department of Justice: Hearing Before the H. Comm. on

the Judiciary, 106th Cong. 75 (2000) (Chamber of

Commerce representative testifying that Commission

should not be permitted to seek disgorgement); Oversight

of Enforcement of the Antitrust Laws: Hearing Before

the S. Subcomm. on Antitrust, Bus. Rights and

Competition of the S. Comm. on the Judiciary, 107th

Cong. 48 (2002) (“[C]ourts in recent years have recognized

the Commission’s authority in antitrust cases to seek in

federal court broad equitable relief, including

disgorgement of ill-gotten gains and restitution for

injured consumers, under Section 13(b) of the Federal

Trade Commission Act.”); FTC at 100: Views from the

Academic Experts: Hearing Before the Subcomm. on

Com., Mfg., and Trade of the H. Comm. on Energy and

Com., 113th Congress 119 (2014).

Multiple times a year, the Commission testifies before

the Congressional committees that oversee the agency

and informs them of its enforcement work. This testimony

has consistently included reports on the Commission’s use

of disgorgement. 5 And the House Judiciary Committee

5

See, e.g., Fed. Trade Comm’n, Prepared Statement, Before the

Subcomm. on Regul. Reform, Com. and Antitrust Law of the H.

Judiciary Comm., at 11 (2015), available at https://perma.cc/XJ25HFEN; Fed. Trade Comm’n, Annual Report to Congress, at 25

(2018), available at https://perma.cc/W2EU-TU29. Archives of the

Commission’s testimony are available at https://perma.cc/ZK8EYX8A. And archives of its annual reports are available at

-8had an entire hearing, where the Federal Trade

Commission’s use of disgorgement was one of only two

topics discussed. See Hearing before H. Comm. on the

Judiciary, 106th Cong. (2000).

In addition, the Antitrust Modernization Commission,

a commission directed by statute to undertake a

comprehensive review of American antitrust law,

reported to Congress and the president that courts

“generally have interpreted Congress’s express

authorization” to seek an injunction as permitting “all

equitable

remedies.”

Antitrust

Modernization

Commission, Report and Recommendations 286 (Apr.

2007). 6 And the Modernization Commission “endorse[d]”

the FTC’s use of “monetary equitable remedies in

competition cases” under Section 13(b), advising that it

was unnecessary to “clarify, expand, or limit” that

authority. Id. at 285.

Moreover, when Congress amended the FTC Act in

1994, the Senate Report specifically mentioned that under

Section 13(b), the Commission “can go into court ex parte

to obtain an order freezing assets, and is also able to obtain

consumer redress.” S. Rep. No. 103-130, 15–16 (1993).

That is, in reviewing and amending the statute, Congress

itself expressly recognized that by authorizing courts to

enter an injunction, the Act enabled courts to award the

full panoply of equitable remedies.

If Congress had wanted to limit courts’ equitable

authority in cases under the FTC Act, it would not have

used language that for hundreds of years has been

https://perma.cc/R67D-8LTW.

6

Available at https://perma.cc/456W-RGQJ.

-9understood to authorize the full equitable power of the

court. Or, at the very least, it would have amended that

language after being expressly informed of the unanimous

interpretation it was being given by courts and the

Commission. It did not do so.

Congress, courts, the FTC, and regulated businesses

have long relied on that choice. This Court should not

upend it.

II. Reading Section 13(b) to silently prohibit courts

from exercising their equitable powers would

undermine the statute.

Congress’s decision not to limit courts’ equitable

authority under the Federal Trade Commission Act

makes perfect sense. The statute directs the FTC to

“prevent persons, partnerships, or corporations . . . from

using unfair methods of competition.” 15 U.S.C. § 45(a)(2).

Its ability to do so relies on courts’ authority to exercise

the wide range of equitable remedies that the power to

issue an injunction has always been understood to

encompass.

Indeed, this Court has frequently recognized that

courts’ broad discretion to fashion equitable remedies is

central to remedying antitrust violations. See, e.g., Ford

Motor Co. v. United States, 405 U.S. 562, 573 (1972)

(explaining that because the “relief in an antitrust case

must be effective to redress the violations and to restore

competition,” courts are “clothed with large discretion to

fit the decree to the special needs of the individual case”

(cleaned up)); United States v. Am. Tobacco Co., 221 U.S.

106, 185 (1911) (court fashioning antitrust remedy has a

“duty of giving complete and efficacious effect to the

prohibitions of the statute”); cf. California v. Am. Stores

Co., 495 U.S. 271, 281 (1990) (holding that “the statutory

-10language [of § 16 of the Clayton Act] indicates Congress’

intention that traditional principles of equity govern the

grant of injunctive relief” and finding divestiture

authorized by the plain text).

Reading Section 13(b) to silently prohibit courts from

exercising that broad discretion would undermine the

statute, and in some cases, render it almost entirely

useless to prevent anticompetitive conduct.

A.

Disgorgement is an essential tool for

preventing unfair methods of competition.

1. For years, the FTC has judiciously sought

disgorgement under Section 13(b) in cases involving

egregious antitrust violations, where the wrongdoer

would otherwise walk away with its ill-gotten gains.

Take, for example, F.T.C. v. Mylan Laboratories, Inc.,

62 F. Supp. 2d 34 (D.D.C. 1999). Mylan Laboratories, the

nation’s second-largest generic drug company, illegally

conspired with its suppliers to deny its competitors access

to the ingredients for two widely-prescribed anti-anxiety

drugs. Fed. Trade Comm’n, FTC Reaches Record

Financial Settlement to Settle Charges of Price-fixing in

Generic Drug Market (Nov. 29, 2000). 7 Having blocked the

competition, Mylan then raised the price on these drugs

by over 1,900%, earning itself an extra $120 million. Id.;

Mylan, 62 F. Supp. 2d. at 34. The FTC was able to

disgorge much of this profit and return it to those who

overpaid. See id.

Because the FTC was able to disgorge Mylan’s profits,

Mylan and other drugmakers learned that illegally

blocking their competitors from obtaining the ingredients

7

Available at https://perma.cc/XBS9-WJGL.

-11they need would not ultimately make them money. And, in

the years since, few drugmakers have even tried. In other

words, the Commission’s ability to seek disgorgement has

gone a long way towards preventing this anticompetitive

conduct.

Disgorgement has also been critical to preventing

brand-name drug manufacturers from illegally paying

generic drug makers to delay the entry of generic drugs

onto the market. Such pay-for-delay schemes can cost

drug-buyers millions, or even billions, of dollars by forcing

them to buy the more expensive brand-name drug for

years longer than they would otherwise have to. See supra

note 3.

In F.T.C. v. Cephalon, the FTC obtained

disgorgement from a brand-name drug manufacturer that

had paid four competitors to wait years before beginning

to sell a generic version of its highly profitable sleepdisorder drug—all the while drug purchasers (consumers,

pharmacies, and insurers) paid over a billion dollars more

for the drug than they would have had the generics been

on the market. Press Release, Fed. Trade Comm’n, FTC

Settlement of Cephalon Pay for Delay Case Ensures $1.2

Billion in Ill-Gotten Gains Relinquished (May 28, 2015). 8

The money disgorged from the company went to repay

those who had overpaid for the drug. See id.

This

disgorgement

sent

a

key

message:

Unambiguously unlawful payments to delay generic entry

will be unprofitable. Cf. F.T.C. v. Cephalon, Inc., 100 F.

Supp. 3d 433, 440 n.5 (E.D. Pa. 2015) (noting that

Cephalon’s defense relied on the “scope of the patent”

standard that this Court had definitively rejected). Since

8

Available at https://perma.cc/8XL9-LQ5C.

-12the Cephalon case, there have been few instances of

brand-name manufacturers attempting to overtly use

large and unjustified payments to delay generic entry.

2. If the Commission is no longer able to seek equitable

monetary relief in cases like this, these violations will

continue to be profitable. And the agency’s ability to

prevent antitrust violations—that is, to accomplish the

primary goal of the FTC Act—will be severely

compromised.

The agency’s own experience proves the point. For

years there has been “an epidemic” of physician pricefixing schemes, in which competing doctors collude to

extract higher rates from insurance companies. See, e.g.,

Thomas L. Greaney, Chicago’s Procrustean Bed:

Applying Antitrust Law in Health Care, 71 Antitrust L.J.

857, 892 (2004); Stephen Calkins, Civil Monetary

Remedies Available to the Federal Government,

Testimony to Antitrust Modernization Committee, at 6

(Nov. 30, 2005). 9 These higher fees are then passed on to

consumers as higher premiums. See Robert Pitofsky,

Prepared Statement of the Fed. Trade Comm’n, Before

the H. Judiciary Comm., at 5 (1999). 10

Since 2000, the FTC has brought dozens of

enforcement proceedings against healthcare providers for

colluding with their competitors to negotiate higher

reimbursement rates. See Fed. Trade Comm’n, Overview

of FTC Actions in Health Care Services and Products 7–

36 (June 2019). 11 The FTC did not lose a single one of these

cases. But it sought and obtained disgorgement only once.

9

Available at https://perma.cc/MA22-78HT.

10

Available at https://perma.cc/AXX6-7GHN.

11

Available at https://perma.cc/7NYH-QPMC.

-13-

See id. at 31. In most cases, then, the only real

consequence of physician price-fixing is an order not to do

it again. Unsurprisingly, that has not worked to prevent

the problem. See Calkins, Civil Monetary Remedies

Available, at 7 (quoting FTC Chair stating that “by some

estimates,” ten percent “of all doctors in the country”

were under order to stop colluding and that “the message

is not being heard”).

The FTC, in other words, cannot do its job of

preventing antitrust violations if it must permit even those

that commit egregious misconduct to keep their ill-gotten

gains.

3. Private litigation is often proffered as the solution to

this problem. But while private lawsuits are a crucial tool

for enforcing antitrust law, they are often insufficient. For

one thing, those most harmed by anticompetitive behavior

are often too dependent on the antitrust violator to be

willing to sue them. As a result, there are many cases in

which there simply is no private litigant willing to file a

lawsuit. For example, despite the prevalence of physician

price-fixing schemes, there are almost no private lawsuits

challenging them. See Calkins, Civil Monetary Remedies

Available, at 6. That’s because the “most logical plaintiffs,”

the health insurance companies, “are loath to sue

providers with whom they desire a long-term, mutually

beneficial business relationship.” See id.

Even if there is someone willing to sue, there are

numerous obstacles to doing so. See, e.g., Joseph P. Bauer,

The Stealth Assault on Antitrust Enforcement: Raising

the Barriers for Antitrust Injury and Standing, 62 U. Pitt.

L. Rev. 437, 444–46 (2001); Einer Elhauge, Disgorgement

as an Antitrust Remedy, 76 Antitrust L.J. 79, 83 (2009).

-14For instance, antitrust litigation can often only be

brought as a class action, but class certification has

become increasingly difficult. See Elhauge, supra, at 83–

84 (“Where once courts recognized that, because antitrust

cases involve marketwide injuries, they are uniquely

suitable for class action treatments, many courts now

seem willing to accept arguments that in markets with

product differentiation, buyer negotiation, or price

discrimination, injuries are individuated in a way that

undermines common proof of injury, even when the case

involves horizontal price fixing.”).

And, in some cases, arbitration clauses prevent class

actions entirely—a prohibition this Court has upheld, even

when the cost of bringing an individual arbitration

outweighs the expected damages. See Am. Exp. Co. v.

Italian Colors Rest., 570 U.S. 228, 236 (2013).

This Court has also repeatedly held that, in most cases,

only a direct purchaser of a product or service may sue an

alleged antitrust violator under federal antitrust law.

Apple Inc. v. Pepper, 139 S. Ct. 1514, 1520 (2019). So

indirect purchasers—that is, the end users of a product or

service—are typically unable to sue.

But direct purchasers are often unwilling to sue their

suppliers for the same reason health insurers won’t sue

physicians: They depend on them. And they can pass any

overcharge on to their customers. See Andrew I. Gavil,

Thinking Outside the Illinois Brick Box: A Proposal for

Reform, 76 Antitrust L.J. 167, 192 (2009). 12

12

Contrary to the assertion of AMG’s amicus SureScripts (at 25),

the FTC’s ability to obtain disgorgement and restitution does not

undermine the policies underlying the direct-purchaser rule. As the

-15There are numerous examples of egregious antitrust

violations that go unchallenged by the direct purchasers

subject to them. Recently, for example, the FTC filed a

complaint against Vyera Pharmaceuticals and its founder

Martin Shkreli, alleging that Vyera monopolized the

market for its life-saving toxoplasmosis drug, Daraprim,

by illegally preventing generic drug manufacturers from

having access to it. See Press Release, Fed. Trade

Comm’n, FTC and NY Attorney General Charge Vyera

Pharmaceuticals, Martin Shkreli, and Other Defendants

with Anticompetitive Scheme to Protect a List-Price

Increase of More Than 4,000 Percent for Life-Saving

Drug Daraprim (Jan. 27, 2020). 13 Such access is necessary

because to get FDA approval to sell a generic,

manufacturers need samples of the brand-name drug to

demonstrate bioequivalence. Id. By blocking generics

from having access to Daraprim—and therefore from

majority of the Commission recognized in Mylan, this Court has

strictly limited that rule to actions under the Clayton Act. See

California v. ARC America Corp., 490 U.S. 93 (1989) (“[I]n Illinois

Brick, the issue before the Court in both that case and Hanover Shoe

was strictly a question of statutory interpretation—what was the

proper construction of § 4 of the Clayton Act.”). Further, neither of

the policy justifications for the rule apply here. The measure of

disgorgement is the defendant’s unjust enrichment, which does not

entail any of the measurement problems the Court sought to address

by the indirect purchaser rule. See Mylan Labs., 62 F. Supp. 2d at 41

(“[T]he [Supreme] Court’s concern [in Illinois Brick] for the

complexity of the damages proceeding is not implicated by a

disgorgement action.”). And courts and the Commission are both wellequipped to prevent duplicative recovery. See infra page 20–21.

Indeed, neither AMG nor any of its amici can point to a single instance

of it ever actually happening. See id

Available at https://perma.cc/653M-X6DA. The complaint in the

case is available at https://perma.cc/6MUW-SEYB.

13

-16competing with it—Vyera was able to increase the price of

this essential medication by over 4,000%. Id.

The direct purchasers of Daraprim are Vyera’s

distributors. Vyera ensured that generic manufacturers

couldn’t get access to Vyera by prohibiting its distributors

from selling to them. See id. But in nearly a year since the

Commission filed its complaint, no direct purchaser has

brought suit. That’s unsurprising: Vyera’s distributors are

compensated on the basis of the drug’s exorbitant list

price, and if they fall out of favor with Vyera, they lose the

enormous profit distributing Daraprim brings. And so,

despite Vyera’s blatant misconduct, there’s been no

private enforcement of any kind. See also Bauer, The

Stealth Assault, 62 U. Pitt. L. Rev. at 446 (describing

inability of consumers to challenge Ticketmaster’s use of

its monopoly power over event tickets to extract

supracompetitive fees because the Eighth Circuit held

they were not direct purchasers); Am. Antitrust Inst.,

Comments of American Antitrust Institute Working

Group on Remedies to Antitrust Modernization

Commission, 19 (June 17, 2005) (auto manufacturers

illegally prevented cheaper Canadian cars from entering

the American market, but the direct purchasers, car

dealers, did not sue). 14

State-law suits are not a sufficient substitute for the federal

claims consumers would bring absent the direct-purchaser rule.

Although several states do permit indirect purchasers to bring claims

under state law, many others do not. See Newberg on Class Actions §

20:12, at 435-439 (5th ed. 2011) (identifying 13 states that lack indirect

purchaser laws, six that allow indirect purchaser suits only by the

attorney general, and five that have never ruled on indirect purchaser

standing).

14

-17In short, many victims of anticompetitive conduct can’t

successfully sue. What’s more, when they do, the antitrust

violator usually pays less in damages than the profits it

gained from its misconduct. See, e.g., John M. Connor &

Robert H. Lande, Not Treble Damages: Cartel

Recoveries Are Mostly Less Than Single Damages, 100

Iowa L. Rev. 1997, 1998 (2015) (finding, in study of “every

completed private U.S. cartel case since 1990,” that

“median average settlement was 37% of single damages”).

That’s why the FTC Act does not prohibit courts from

using their traditional equitable powers to award

disgorgement. It is critical to the FTC’s mission to

prevent anticompetitive conduct. This Court should not

interpret the statute in a way that would render it unable

to accomplish its central aim.

4. AMG and its amici argue that there is no need for

the FTC to obtain equitable monetary remedies under

Section 13(b) of the statute because it can do so under

Section 19, following an administrative proceeding and the

issuance of a cease and desist order. That’s wrong for two

reasons. First, Section 19 applies only to “unfair or

deceptive acts or practices.” 15 U.S.C. § 57b. By its terms,

it does not apply to unfair methods of competition. See id.

Thus, the argument that Section 19 is a sufficient

substitute for equitable relief under Section 13(b) ignores

half of the FTC’s mission: to prevent unfair methods of

competition.

Second, even if consumer redress under Section 19

could be awarded in competition cases, requiring its use in

every case would be a tremendous waste of the

Commission and defendants’ resources. Each case would

have to be litigated three times: first, in district court so

the Commission could obtain a preliminary asset freeze

-18under Section 13(b), then in administrative proceedings to

obtain a cease and desist order, and then back to district

court again for monetary remedies. Congress created a

judicial pathway so that when the Commission does not

seek to further expand upon the prohibitions of the FTC

Act, it need not go through—or put defendants through—

this years-long multi-forum process. See S. Rep. No. 93151, at 31 (1973); FTC Br. 5–6.

Worse, on AMG’s reading of the statute, the first

step—going to court to obtain an asset freeze—would be

foreclosed, rendering the whole exercise a fruitless

endeavor. The statutory authority for preliminary

equitable relief, including an asset freeze, is Section 13(b).

But on AMG’s view, that section prohibits courts from

freezing defendants’ assets. See infra page 24. So by the

time the agency got through its years-long administrative

proceeding, followed by its court proceedings, any

antitrust violator worth its salt would have already

dissipated the assets the FTC sought.

That is not an adequate substitute for the judicial

pathway Congress actually provided.

5. AMG’s amici, Pharmaceutical Research and

Manufacturers of America and Surescripts, LLC, argue

that the FTC has abused its authority to seek equitable

monetary remedies in competition cases. Not so. The FTC

has used these remedies judiciously in a small number of

cases to prevent companies that had committed egregious

wrongdoing from profiting from their misconduct. See,

e.g., supra pages 10–12.

To start, SureScripts asserts that the FTC’s use of

disgorgement in antitrust cases has “more than double[d]”

since 2012. SureScripts Amicus Br. 18. But it has “more

than double[d]” to a grand total of seven cases—seven

-19cases in nearly ten years. See id. (listing cases). That is not

a sign of abuse; it is a sign of restraint.

Next, SureScripts cites (at 18) four cases in which, it

asserts, the disgorgement awards sought by the FTC

were “staggering.” But disgorgement is, by definition,

limited to the wrongdoer’s ill-gotten gains. The

Commission has never sought—and could not possibly

obtain—any money from a defendant beyond the profits

the defendant reaped from its illegal conduct. To the

extent the Commission’s disgorgement figures are

staggering, it is because the profits extracted by these

defendants in violation of the law were “staggering.”

Indeed, it is precisely these cases, cases where violating

the law is extremely profitable, that disgorgement is most

necessary. Otherwise, violating the law will continue to be

good business.

Citing its own case, SureScripts accuses the

Commission of bringing cases against defendants where

the law is insufficiently clear to provide fair notice. That’s

simply not true. SureScripts’ opposition to FTC

enforcement is understandable, given the enforcement

action against it. But as the court in that case held, the

claims against the company—that SureScripts preserved

its monopoly through threats and de facto exclusivity

agreements preventing its customers from doing business

with its competitors—are firmly “ground[ed]” in “Circuit

precedent.” F.T.C. v. Surescripts, LLC, 424 F. Supp. 3d

92, 98 (D.D.C. 2020).

The FTC seeks disgorgement in egregious cases, not

liminal ones. Of course, as the Commission points out (at

44), if the FTC were truly bringing cases against

defendants who had no notice they were violating the law,

the Due Process Clause would prevent it from prevailing.

-20Defendants are already protected from this supposed

harm. There is no need to give the FTC Act a new meaning

to do so.

Finally, AMG’s amici fret that equitable monetary

relief, when combined with private actions, could lead to

duplicative recovery. But they point to no example of this

ever happening. See Gavil, Thinking Outside the Illinois

Brick Box, 76 Antitrust L.J. at 192 n.76 (“[I]f the threat of

multiple recoveries . . . was genuine, one would think some

obvious examples would be observable after more than

three decades.”). In fact, PhRMA admits (at 10) that

courts are able to prevent this problem. And in its

disgorgement cases, the Commission has done so. See,

e.g., F.T.C. v. Cephalon, Inc., 100 F. Supp. 3d 433, 440

(E.D. Pa. 2015) (explaining that disgorgement would be

placed in a “Consumer Relief Fund,” from which any

damages obtained by private plaintiffs could be paid,

preventing duplicative recovery); see also Statement of

Chairman Robert Pitofsky and Comm’rs Sheila F.

Anthony & Mozelle W. Thompson, Federal Trade

Commission v. Mylan Laboratories, Inc., FTC File No.

X990015 (“Courts have routinely coordinated remedies in

government disgorgement actions and private damage

actions, and are readily able to surmount the potential

problem of duplicative recovery.”); id. n.3 (citing

numerous examples).

Not to mention that equitable monetary relief is

equitable—that is, courts have discretion not to grant it if

they believe it is unnecessary or unfair. Section 13(b) only

enables the FTC to seek disgorgement. It is the court that

decides whether to grant it.

For decades, the FTC has used its power to seek

monetary equitable relief responsibly, seeking

-21disgorgement in a limited number of cases to ensure that

egregious antitrust violators cannot profit off their

misconduct and to return those profits to those who have

been harmed. In these cases, courts’ authority to grant

disgorgement is essential to the FTC’s ability to prevent

this misconduct from continuing. The law—as courts, the

agency, and Congress have understood it for years—does

precisely what it was intended to do. This Court should not

change it.

B.

The Federal Trade Commission depends on

courts’ traditional equitable authority to

fashion effective preliminary relief.

Reading Section 13(b) to limit courts’ traditional

equitable powers would not just prevent the Federal

Trade Commission from obtaining disgorgement at the

end of litigation, it would also threaten to deprive the

Commission of essential preliminary remedies—

particularly in cases involving illegal mergers and

acquisitions.

There is no doubt that following litigation, Section

13(b) permits courts to enter a permanent injunction

ordering divestiture. Cf. Am. Stores, 495 U.S. at 281

(holding that “[o]n its face,” a “grant of authority” to enter

“injunctive relief” includes injunctions requiring

divestiture). But as this Court has observed, it is often

difficult, if not impossible, to unscramble a merger years

after the fact. See F.T.C. v. Dean Foods Co., 384 U.S. 597,

607 n.5 (1966). It is imperative, therefore, that the

Commission be able to obtain preliminary relief that

prevents the scrambling of assets in the first place.

-22Indeed, this is one of the primary reasons Section 13(b)

was passed in the first place. 15

In many cases, the Commission can simply obtain an

order temporarily enjoining the merger. But in some

instances, the merging companies make that impossible.

Take, for example, F.T.C. v. Elders Grain, Inc., 868 F.2d

901 (7th Cir. 1989). In that case, one of the largest

producers of industrial dry corn—processed corn used to

make food like corn flakes, bread, and beer—acquired

another large dry corn producer, further consolidating a

market that only had a handful of manufacturers to begin

with. See id. at 902. The companies were “well aware that

the Commission possessed serious reservations about the

legality of the [deal] before it was consummated.” F.T.C.

v. Ill. Cereal Mills, Inc., 691 F. Supp. 1131, 1146 (N.D. Ill.

1988). So they structured their transaction to avoid the

statutory requirement that they notify the FTC. Id. And

they accelerated their closing date, ensuring the

Commission could not get into court in time to stop it. See

Elders Grain, 868 F.2d at 907.

The Commission instituted an administrative

proceeding challenging the acquisition. See Illinois Cereal

Mills, 691 F. Supp. at 1134. But if it could not unwind the

deal in the meantime, it would be difficult if not impossible

to do so later. See id. So the Commission asked a district

court to rescind the merger, pending the completion of

administrative proceedings. See id.

See F.T.C. v. Ill. Cereal Mills, Inc., 691 F. Supp. 1131, 1146

(N.D. Ill. 1988), aff’d sub nom. F.T.C. v. Elders Grain, Inc., 868 F.2d

901 (7th Cir. 1989) (“This persistent problem has been long recognized

by courts, and is the underlying reason for the Commission’s

authority to seek preliminary relief under Section 13(b) of the FTC

Act”).

15

-23In upholding the court’s decision to do so, the Seventh

Circuit explained that interpreting Section 13(b) to

remove courts’ traditional authority to order rescission

“as a form of preliminary equitable relief” would “go far

toward rendering the statute a dead letter.” Elders Grain,

Inc., 868 F.2d at 907. It would mean that companies could

violate the law with impunity and, as long as they acted

quickly enough, they could prevent the FTC from ever

being able to do anything about it. See id. Nothing in the

text or history of the statute requires that absurd result.

To the contrary, in declining to limit courts’ equitable

powers, Section 13(b) intentionally “preserves the

flexibility of traditional equity practice.” F.T.C. v. Whole

Foods Mkt., Inc., 548 F.3d 1028, 1034 (D.C. Cir. 2008)

(holding that request for preliminary relief was not moot,

despite the completion of the challenged merger while the

appeal was pending, because “courts are clothed with

large discretion to create remedies effective to redress

antitrust violations and to restore competition” (cleaned

up)). This flexibility not only preserves courts’ ability to

order preliminary relief, it enables them to tailor that

relief to preserve the status quo, while minimizing the

impact on regulated businesses and the public.

For example, courts have long used their traditional

equitable powers to enter hold separate orders, “a form of

preliminary relief [that] permits the challenged

transaction to go forward, but requires the acquiring

company to preserve the acquired company (or certain of

the acquired assets) as a separate and independent

entity.” F.T.C. v. Weyerhaeuser, Co., 665 F.2d 1072, 1075

n.7 (D.C. Cir. 1981) (citing examples going back to 1956);

see also Whole Foods Mkt., 548 F.3d at 1034 (“[C]ourts

retain the power to preserve the status quo nunc, for

-24example by means of a hold separate order.”). The FTC

often relies on these orders to ensure that illegallyacquired assets do not become so intertwined with preexisting assets that divestiture becomes impossible.

If Section 13(b) prohibited traditional equitable

remedies, the agency’s—and courts’—only option for

ensuring that a company will be able to divest its illegallyacquired assets would be to block a merger or acquisition

outright. And so the agency would always be forced to

forego a more targeted remedy—with less impact on the

regulated business—in favor of the most drastic

alternative, even when the Commission itself believes it is

unnecessary to do so. That cannot be what Congress

intended.

Nor could Congress have intended to permit antitrust

violators to dissipate their assets during the course of

enforcement proceedings, so that no matter the result,

they never have to disgorge their ill-gotten gains. Yet that

is precisely what AMG’s reading of the statute would

require. Section 13(b) does not specifically mention asset

freezes. Therefore, on AMG’s view, it necessarily

prohibits them—even though that’s directly contrary to

the well-established understanding of courts’ equitable

power. See, e.g., Deckert v. Indep. Shares Corp., 311 U.S.

282, 290 (1940); U.S. Oil & Gas Corp., 748 F.2d at 1431.

AMG’s interpretation of Section 13(b) would “go far

toward rendering the statute a dead letter.” Elders Grain,

Inc., 868 F.2d at 907. All an antitrust violator would have

to do to evade the statute is close its deal before the FTC

can get to court or dissipate its assets before the end of a

years-long administrative proceeding. Luckily, that is not

what the statute requires. This Court should reject AMG’s

invitation to hold otherwise.

-25CONCLUSION

This Court should affirm the decision below.

Respectfully submitted,

JENNIFER D. BENNETT,

Counsel of Record

GUPTA WESSLER PLLC

100 Pine Street Suite 1250

San Francisco, CA 94111

(415) 573-0336

jennifer@guptawessler.com

MATTHEW W.H. WESSLER

GUPTA WESSLER PLLC

1900 L Street NW, Suite 312

Washington, DC 20036

(202) 888-1741

RANDY M. STUTZ

AMERICAN ANTITRUST

INSTITUTE

1025 Connecticut Ave., NW

Suite 1000

Washington, DC 20036

(202) 905-5420

December 7, 2020

Counsel for Amicus Curiae