EU Court Confirms European Commission’s Decision on Pay-for-Delay Agreements

On 8 September 2016, the General Court of the European Union upheld the European Commission’s decision in which the antitrust regulator imposed fines of approximately EUR 150 million on Lundbeck and a number of generic companies for entering into reverse settlement agreements which delayed the entry of cheaper generic versions of a blockbuster antidepressant.

The Commission had first hinted that patent settlement agreements causing delayed generic entry might be problematic in its 2009 report on the Pharmaceutical Sector Inquiry. Continue Reading

European Commission Challenges Public Price Announcements by Shipping Liner Companies

On 7 July 2016, the European Commission adopted a decision accepting commitments by 14 shipping liner companies to change their practices concerning announcements of intended price increases for containerised shipping services. The Commission considered that these announcements were anti-competitive and resulted in higher prices for container liner shipping services, thereby harming customers. Continue Reading

FTC Report on Patent Assertion Entities Recommends Patent Litigation Reform

On October 6, the Federal Trade Commission (FTC) released its report on patent assertion entity (PAE) activity. The report is the result of research that began in September 2014 to address a gap in the agency’s understanding of PAEs, how they operate and how policies can be developed to reduce nuisance litigation. The study focused on PAE practices, including acquisition, litigation and licensing. The FTC recommends that policymakers address asymmetries in PAE litigation through various procedural and substantive reforms.

Read the full article here.

Change in LBO Valuation for HSR Purposes

The Federal Trade Commission (FTC) recently reversed its position on how to calculate the size-of-transaction for HSR purposes in connection with leveraged buyouts (LBOs). This change in position may result in more reportable transactions.

As detailed here, the FTC’s position, effective immediately, is that any new debt used to finance an LBO transaction, counts toward the size of transaction. Previously, whether or not new debt used to finance an LBO transaction was included in the size of transaction turned on whether the buyer or the target company incurred, provided, or guaranteed the debt.

This does not change the treatment of payment of third-party debt out of transaction consideration:

  • In equity transactions, payment of third-party debt that is deducted from the consideration ultimately paid by the buyer to seller is not included in the size of transaction (e.g., $100 million purchase price of which $30 million goes to pay off third party debt = $70 million transaction for HSR purposes).
  • In asset acquisitions, assumption of liabilities continues to be additive to the purchase price (e.g., $50 purchase price plus $30 million in assumed liabilities = $80 million transaction for HSR purposes).

FTC’s Largest Pharmaceutical Divestiture Gives Insight into Broader Theories of Harm

In pharmaceutical transactions involving generic products, the Federal Trade Commission (FTC) has typically focused on narrow antitrust theories of harm and applied a narrow product market analysis often limited to a treatment for a particular indication (and sometimes to a specific mechanism of action). In these transactions, the FTC has consistently required fixes for generic overlaps when the transaction (1) reduces the number of significant generic competitors in a particular product market to three or fewer or (2) involves the combination of a branded pharmaceutical product with a “first-to-file” generic for the same product for which there are no other generics yet on the market. Using this narrow methodology, pharmaceutical transactions involving generics that required a fix could move through the FTC review process very quickly and generally achieve clearance in approximately six months from filing.

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Election 2016: Trump on Antitrust

While antitrust policy and enforcement has not received much attention from Donald Trump on the campaign trail, Mr. Trump has made a few notable statements regarding antitrust law that provide hints as to potential antitrust enforcement priorities for a Trump administration. Mr. Trump’s history as both a plaintiff and defendant in antitrust litigation is also notable and unprecedented.

In his 2011 book Time to Get Tough: Making America #1 Again, Mr. Trump addressed the Organization of the Petroleum Exporting Countries (OPEC) specifically in the context of antitrust law. Under the heading “Sue OPEC” Mr. Trump wrote:

We can start by suing OPEC for violating antitrust laws. Currently, bringing a lawsuit against OPEC is difficult. . . . The way to fix this is to make sure that Congress passes and the president signs the “No Oil Producing and Exporting Cartels Act” (NOPEC) (S.394), which will amend the Sherman Antitrust Act and make it illegal for any foreign governments to act collectively to limit production or set prices. If we get it passed, the bill would clear the way for the United States to sue member nations of OPEC for price-fixing and anti-competitive behavior. . . . Imagine how much money the average American would save if we busted the OPEC cartel. Continue Reading

Antitrust Enforcement under a Clinton Administration: Status Quo or Significant Change?

On Monday, October 3, 2016, Hillary Clinton issued a statement on her website titled “Hillary Clinton’s Vision for an Economy Where our Businesses, our Workers, and Our Consumers Grow and Prosper Together.”

Prior to this statement, there had been some speculation over what a Clinton presidency might bring in terms of antitrust enforcement.

Unlike President Barack Obama, former Secretary Clinton had not issued a clear policy statement on her antitrust position before Monday. She had, however, penned one short op-ed piece for Quartz, and had made some general statements on the campaign trail regarding the problems of industry consolidation. It was unclear from these prior statements whether a Clinton administration would mean any change in the current state of affairs at Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC). The current administration has challenged a higher percentage of mergers than any administration since before Reagan’s, but it has not significantly altered the law regarding what mergers are considered actionable.

In her Quartz op-ed, Secretary Clinton stated that “we need to fix [the system],” and decried the concentrated markets in the pharmaceutical, airline and telecommunications industries. But Secretary Clinton gave only two concrete examples of how she would “take on the fight” against “large corporations.” Continue Reading

Third Circuit Blocks Hospital Merger in Key Victory for FTC on Geographic Market Definition

On September 27, 2016, the US Court of Appeals for the Third Circuit handed an important victory to the Federal Trade Commission and the Commonwealth of Pennsylvania in a closely watched hospital merger case. The decision provides clear guidance on the appropriate tests for determining geographic markets in hospital merger cases, while also suggesting that efficiencies claimed in many hospital transactions may face increased scrutiny in future cases.

Read “Third Circuit Blocks Hospital Merger in Key Victory for FTC on Geographic Market Definition”

General Court Confirms that the Commission May Rely on Lawfully Seized Recordings Even if Made Unlawfully by a Third Party

On 8 September 2016 the General Court (“GC”) dismissed Heiploeg’s appeal against the European Commission’s (“Commission”) decision in Shrimps (AT.39633) and confirmed that the Commission may rely on recordings seized lawfully in a “dawn raid” even if the recordings were made illegally by a third party (T-54/14). This judgment reminds us of the delicate balance between the right to respect for private life and the Commission’s need to obtain high probative evidence when investigating cartels.

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General Court of the EU Confirms Fines Imposed on Lundbeck and Generic Drug Manufacturers for Entering into Patent Settlements

On 8 September 2016, the General Court of the EU (GCEU) handed down five judgments upholding a decision by the Commission of 19 June 2013 imposing fines on Lundbeck, an originator company, and Merck (the parent company of Generics), Arrow, Alpharma and Ranbaxy, four generic companies. The Commission found that the companies had entered into anticompetitive “pay-for-delay” settlement agreements whereby Lundbeck paid a lump sum to the generic companies in exchange for their agreement to delay their entry on the market for Citalopram, an anti-depressant drug.

This ruling is notable in that it is the first time that the GCEU has been asked to rule on patent settlements between originators and generic companies. The GCEU upheld the Commission’s reasoning, noting that the Commission’s reasoning in this case reflects the provisions of its Guidelines on the application of Article 101 of the Treaty on the Functioning of the EU (TFEU) to technology transfer agreements.

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